StudentShare solutions
Triangle menu

Fair value: boon or curse - Essay Example

Extract of sample
Fair value: boon or curse

A wise buyer will buy an asset at equal to or lower than its fair value, and a wise seller will sell at a price equal to or higher than fair value.
The distinctions become more pronounced if what came under consideration was accounting value, or the worth of an asset according to financial records and the workings of generally accepted accounting principles. Theoretically, price should equal value, but since market efficiency is seldom a reality, if ever, in a transaction, buyers and sellers can exploit price and value inconsistencies to their benefit.
The IASB definition of fair value has been described as "substantially similar" to the FASB revised definition, which are both consistent with the measurement objective. (IASB Fair Value Measurement). Under this definition, the fair value of an asset is the amount at which that asset could be bought or sold in a transaction between willing parties, other than in a liquidation. ...Show more

Summary

Two terms used interchangeably in daily conversation: Value, and Price, one taken as a synonym for the other when spoken as layman's terms. But the connotations assume a sharp distinction when these terms are used in the context of finance. An asset may be valuable because it may have a potential to generate income, or it may have substantial intrinsic value; however, it may have a low market price because the buyer may be unaware of its true worth, or the seller was in dire need of money and was willing to sell at a huge discount…
Author : hortenseborer
Fair value: boon or curse essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Fair value: boon or curse"
with a personal 20% discount.
Grab the best paper

Related Essays

Advertising and Sustained Fair Value: The Capitalisation of Brand Intangibles
The researcher of this research will look into one of the tools use by organisations in creating intangible asset – advertising and whether advertising create sustained fair value for the company in the context of the on-going debate regarding the increasing importance of intangibles in the global market economy.
23 pages (5750 words) Essay
Fair Value Accounting and Subprime Crisis
The loans had collateral placed for them. The money was used to purchase subprime instruments like commercial papers. These instruments were trading fairly in the active market prior to the crisis. The observable market prices were used to measure fair value.
3 pages (750 words) Essay
Fair Value Accounting
Since the US GAAPs are also closely linked to IFRS, FASB wants to bring some change in those GAAPS. To move towards fair value accounting, it published a statement on which it defined fair value accounting and provided some guidelines regarding it it also issued a standard in 2007 giving companies an alternative to value assets and liabilities at fair value .
17 pages (4250 words) Essay
Historical cost accounting and fair value acounting
One of the most distinguished differences between these two lies in their definitions. While historic cost is the amount at which the asset or liability was originally obtained, fairvalue is the amount at which the asset could be exchanged or a liability settled between knowledgeable, willing parties in an arms length transaction.
3 pages (750 words) Essay
Fair Value Essay
Fair value is used to represent true value of an asset when the actual cost can not be measured with certainty in absence of actual exchange. This IFRS specifies the accounting mechanism for non - current or fixed assets that are held for sale; and the accounting presentation and disclosure of discontinued operations.
6 pages (1500 words) Essay
Fair Value
The same act stipulates that Fair Value is to be determined as follows: 2. when there is infrequent activity in a market, the market is not well established, small volumes are traded relative to the asset or liability to be valued, or a quoted market price is not available- an estimate of a price for the asset or liability in an active or liquid market." (Australian Prudential Regulation Authority)
5 pages (1250 words) Essay
Historical cost accounting and fair value acounting
to accounting using asset values based on the actual amount of money paid for the asset with no inflation adjustment while fairvalue accounting refers to the value of an asset or liability using an arms length transaction between unrelated,
3 pages (750 words) Essay
Fair Value Accounting
The belief by ASIC is that there is inadequate utilisation of information about markets and the disclosure of methods as well as assumptions
6 pages (1500 words) Essay
Fair value
This outline will present what is fair value measurement and when it is required or permitted in the preparation of financial statements. To apply
8 pages (2000 words) Essay
Disclosure of fair value information in the corporate annual report
re required to value their worth accurately by considering the fair value hierarchy method as it ensures that a company’s sources of revenue are considered from all levels, 1 to 3. This paper provides an insight into how fair value information is treated under the UK context
10 pages (2500 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT