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Fair Value Accounting versus Historical Cost Accounting - the Impact on Financial Statement Presentation

Author

Listed:
  • Nicolae Traian Cristin

    (Department of Finance and Accounting , Faculty of Economic Sciences, University “OVIDIUS”, Constantza, Romania)

  • Pepi Miticã

    (Department of Finance and Accounting, Faculty of Economic Sciences, University “OVIDIUS”, Constantza, Romania)

Abstract

The financial scandals of recent years have further strengthened the hands of the proponents of fair value accounting. By shining a bright light into dark corners of a firm's accounts, fair value accounting precludes the dubious practices of managers in hiding the consequences of their actions from the eyes of outside observers. The debate presents a new start for fair-value accounting going forward and standard setters’ push to extend fair-value accounting into other areas. In our research, we found important issues as an attempt to make sense of the controversies. While there are legitimate concerns about implementations of fair-value accounting , it is less clear that these problems apply to the stipulations of fair-value accounting in the accounting regulations. We believe that historical cost accounting is not the remedy. Fair value accounting is used when reliable fair value estimates are available and when they convey information about operating performance.

Suggested Citation

  • Nicolae Traian Cristin & Pepi Miticã, 2013. "Fair Value Accounting versus Historical Cost Accounting - the Impact on Financial Statement Presentation," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 1399-1404, May.
    • Handle: RePEc:ovi:oviste:v:xii:y:2012:i:1:p:1399-1404
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    Cited by:

    1. Mojca Gornjak, 2017. "Comparison of IAS 39 and IFRS 9: The Analysis of Replacement," International Journal of Management, Knowledge and Learning, International School for Social and Business Studies, Celje, Slovenia, vol. 6(1), pages 115-130.

    More about this item

    Keywords

    fair value; historical cost; IFR;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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