A Standard setter’s framework for selecting between fair value and historical cost measurement attributes: a basis for discussion of “Does fair value accounting for nonfinancial assets pass the market test?”

A Standard setter’s framework for selecting between fair value and historical cost measurement... This paper describes an income-statement-focused framework for selecting between between the fair value and historical cost measurement attributes that differs from the balance-sheet-focused relevance versus reliability tradeoff perspective that is common to most academic research. This income-statement-focused framework is then applied to the Christensen and Nikolaev setting in Rev Account Stud 18(3), (2013) to suggest that most of the study’s findings are not surprising and can be explained by differences in the income-relevance of fair value and historical cost measures for nonfinancial assets rather than issues with the reliability of fair value measurements, which is the perspective taken by the authors. The paper closes by suggesting additional research on the use of fair value and historical cost measures for nonfinancial assets that would be most relevant to current standard-setting activities of the Financial Accounting Standards Board. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

A Standard setter’s framework for selecting between fair value and historical cost measurement attributes: a basis for discussion of “Does fair value accounting for nonfinancial assets pass the market test?”

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Publisher
Springer Journals
Copyright
Copyright © 2013 by Springer Science+Business Media New York
Subject
Economics / Management Science; Accounting/Auditing; Finance/Investment/Banking; Public Finance & Economics
ISSN
1380-6653
eISSN
1573-7136
D.O.I.
10.1007/s11142-013-9238-7
Publisher site
See Article on Publisher Site

Abstract

This paper describes an income-statement-focused framework for selecting between between the fair value and historical cost measurement attributes that differs from the balance-sheet-focused relevance versus reliability tradeoff perspective that is common to most academic research. This income-statement-focused framework is then applied to the Christensen and Nikolaev setting in Rev Account Stud 18(3), (2013) to suggest that most of the study’s findings are not surprising and can be explained by differences in the income-relevance of fair value and historical cost measures for nonfinancial assets rather than issues with the reliability of fair value measurements, which is the perspective taken by the authors. The paper closes by suggesting additional research on the use of fair value and historical cost measures for nonfinancial assets that would be most relevant to current standard-setting activities of the Financial Accounting Standards Board.

Journal

Review of Accounting StudiesSpringer Journals

Published: Jun 23, 2013

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