European Financial and Accounting Journal 2009, 4(3):6-18 | DOI: 10.18267/j.efaj.70

Historical Costs versus Fair Value Measurement in Financial Accounting

Dana Dvořáková
Doc. Ing. Dana Dvořáková, Ph.D. - associate professor; Department of Financial Accounting and Auditing, Faculty of Finance and Accounting, University of Economics, Prague, W. Churchill Sq. 4, Prague 3, 130 67, Czech Republic; <ddvorak@vse.cz>.

There are two important points in which in which we need assets and liabilities measured in financial accounting: on initial recognition and at a balance sheet day. Many International Financial Reporting Standards (IFRS) used the fair value measurement concept. But most of these standards use the fair value measurement method only at a balance sheet day. On initial recognition assets and liabilities are measured usually at costs. The IASB presented the discussion paper "Measurement Bases for Financial Accounting - Measurement on Initial Recognition (2005)" which proposed fair value measurement on initial recognition for all assets and liabilities. This article is aimed on assessment of risks arising from extending fair value measurement using and on issue of fair value measurement in time of financial crisis.

Keywords: Accounting, Fair value, Measurement
JEL classification: M41

Published: October 1, 2009  Show citation

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Dvořáková, D. (2009). Historical Costs versus Fair Value Measurement in Financial Accounting. European Financial and Accounting Journal4(3), 6-18. doi: 10.18267/j.efaj.70
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References

  1. CASB (2005): Measurement Bases for Financial Accounting - Measurement on Initial Recognition, discussion paper prepared by staff of the Canadian Accounting Standards Board. Toronto, Canadian Accounting Standards Board, 2005.
  2. Dougherty, J. (2008): Can an Accounting Fix End the Financial Crisis? [on-line], Washington Independent, 2nd October, 2008, [cit. 10th October, 2009], <http://washingtonindependent.com/9994/mark-to-market>.
  3. IASB (2008): International Financial Reporting Standards. London, International Accounting Standards Board, 2008.
  4. IASB (2009): IASB Response to the Financial Crisis. [on-line], London, International Accounting Standards Board, c2009, [cit. 10th October, 2009], <http://www.iasb.org/Financial+crisis/Response+to+the+credit+crisis. htm>.
  5. SEC (2008): Report and Recommendations Pursuant to Section 133 of the Emergency Economic Stabilization Act of 2008: Study on MarkTo-Market Accounting. [on-line], Washington, D.C., United States Securities and Exchange Commission, c2008, [cit. 10th October, 2009], <http://www.sec.gov/news/studies/2008/marktomarket123008.pdf>.

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