Finance: Fair value accounting during the financial crisis

Finance: Fair value accounting during the financial crisis Research Paper example
Masters
Research Paper
Finance & Accounting
Pages 22 (5522 words)
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[Name of Student] [Name of Instructor] [Name of Course] [Date] Fair Value Accounting During the Financial Crisis Part 1: Introduction: The financial crisis of 2007 has been a basis of a number of problems being faced by the international business and accounting profession in particular…

Introduction

The impact of the overall situation of financial crisis had a severe reaction on the social institutions as well, leading unemployment rate to increase since a large number of finnacinal institutions had to face failures and ultimately, bankruptcy. As a result, a number of debates have been observed between investigators that the credit crunch was due to the misinterpretation of assets and hedging strategies in the shape of subprime loans and mortgage backed securities (Deff and Phelps). The major concern of the debaters was the implication of fair value accounting systems which led to the situation where it has been blamed for facilitating the sustainment of the financial crisis which has led to massive government bailouts of financial institutions. As a result, it was marked that the Bush administration, FASB and SEC responded to the financial crisis with Acts and amendments to take a grasp of the situation (Twaronite and Levine). The aim of this paper is to critically evaluate the role of the fair value accounting’s role in the financial crisis. This will be done by carefully taking an in-depth analysis of the accounting systems and alternatives. Also, different factors such as subprime loans, mortgage backed securities etc, have led the fair accounting system to affect the financial turmoil. ...
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