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Fair Value and the IASB/FASB Conceptual Framework Project: An Alternative View

  • Geoffrey WhittingtonEmail author

Abstract

This chapter analyses issues arising from the project of the IASB and FASB to develop a joint conceptual framework for financial reporting standards. It discusses, in particular, the possible use of fair value as the preferred measurement basis. Two competing world views are identified: a Fair Value View, implicit in the IASB’s public pronouncements, and an Alternative View implicit in publicly expressed criticisms of the IASB’s pronouncements. The Fair Value View assumes that markets are perfect and complete and that financial reports should meet the needs of investors and creditors by reporting fair values derived from current market prices. The Alternative View assumes that markets are imperfect and incomplete and that, in such a market setting, financial reports should also meet the monitoring requirements of current shareholders by reporting transactions and events using measurements that reflect the opportunities available to the reporting entity. The different implications of the two views are illustrated by reference to specific issues in recent accounting standards.

Keywords

Corporate Governance Balance Sheet Discussion Paper Alternative View International Financial Reporting Standard 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Centre for Financial Analysis and PolicyUniversity of CambridgeCambridgeUK

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