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).