Review of Accounting Studies

, Volume 18, Issue 3, pp 776–782 | Cite as

A Standard setter’s framework for selecting between fair value and historical cost measurement attributes: a basis for discussion of “Does fair value accounting for nonfinancial assets pass the market test?”

  • Thomas J. Linsmeier


This paper describes an income-statement-focused framework for selecting between between the fair value and historical cost measurement attributes that differs from the balance-sheet-focused relevance versus reliability tradeoff perspective that is common to most academic research. This income-statement-focused framework is then applied to the Christensen and Nikolaev setting in Rev Account Stud 18(3), (2013) to suggest that most of the study’s findings are not surprising and can be explained by differences in the income-relevance of fair value and historical cost measures for nonfinancial assets rather than issues with the reliability of fair value measurements, which is the perspective taken by the authors. The paper closes by suggesting additional research on the use of fair value and historical cost measures for nonfinancial assets that would be most relevant to current standard-setting activities of the Financial Accounting Standards Board.


Fair value Historical cost Nonfinancial assets FASB 

JEL Classification

M4 M41 


  1. Christensen, H. B., & Nikolaev, V. V. (2013). Does fair value accounting for non-financial assets pass the market test? Review of Accounting Studies. doi: 10.1007/s11142-013-9232-0.
  2. Financial Accounting Standards Board (FASB). (2010). Concepts Statement No. 8, Conceptual Framework for Financial Reporting: Chapter 1, The Objective of General Purpose Financial Reporting, and Chapter 3, Qualitative Characteristics of Useful Financial Information (a replacement of FASB Concepts Statements No. 1 and No. 2), FASB: Norwalk, CT.Google Scholar

Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Financial Accounting Standards Board (FASB)NorwalkUSA

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