Proponents of the use of Fair Value Accounting (FVA) argue that the use of fair value reflects current market conditions. On the contrary, opponents of the FVA argue that under specific circumstances, such as a financial crisis, mark-to-market accounting may lead to considerable volatility in the financial statements and especially the Income Statement (Laux and Leuz, 2009). Critically discuss the merits and flaws of FVA in relation to cost accounting. Recommended Reference Laux, C., & Leuz, C. (2009). The crisis of fair-value accounting: Making sense of the recent debate. Accounting, organizations and society, 34(6-7), 826-834.
Proponents of the use of Fair Value Accounting (FVA) argue that the use of fair value reflects current market conditions. On the contrary, opponents of the FVA argue that under specific circumstances, such as a financial crisis, mark-to-market accounting may lead to considerable volatility in the financial statements and especially the Income Statement (Laux and Leuz, 2009). Critically discuss the merits and flaws of FVA in relation to cost accounting. Recommended Reference Laux, C., & Leuz, C. (2009). The crisis of fair-value accounting: Making sense of the recent debate. Accounting, organizations and society, 34(6-7), 826-834.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject 3
A. Proponents of the use of Fair Value Accounting (FVA) argue that the use of fair
value reflects current market conditions. On the contrary, opponents of the FVA
argue that under specific circumstances, such as a financial crisis, mark-to-market
accounting may lead to considerable volatility in the financial statements and
especially the Income Statement (Laux and Leuz, 2009). Critically discuss the
merits and flaws of FVA in relation to cost accounting.
Recommended Reference
Laux, C., & Leuz, C. (2009). The crisis of fair-value accounting: Making sense of
the recent debate. Accounting, organizations and society, 34(6-7), 826-834.
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