The Debate Surrounding IFRS ‘Fair Value’

Level: Undergraduate | Grade: First | Approx. Word Count: 1,800


Since its introduction by the IASB, there has been increasing debate over the effectiveness of the 'Fair Value' concept. This essay examines that debate and assesses the impact the model has on key element of financial reporting.

The rationale behind the IASB’s development of the ‘fair value’ concept was designed to result in a more accurate reflection of business assets, liabilities, revenue and expenses at the date the financial reporting of the corporation took place (IASB 2001). It was considered by the board that this approach with provide investors and other stakeholder groups with a more accurate reflection of the worth of a corporation of the realisable or ‘market’ value of these items (Van Ziji and Whittington 2006).