Is the fair value measurement accountable for the economic downturn?

Historical cost and fair value accounting should not be viewed as rivals, as they fulfill distinct objectives.

Historical cost informs investors of the initial cost of an investment, while fair value provides an estimate of the expected return. While knowledge of fair value is crucial, it is not sufficient on its own. Investors also need to be aware of the cost of the investment to effectively evaluate stewardship and understand the resources that have been sacrificed to achieve the fair value. This paper concludes that both historical cost and fair value should be provided to deliver comprehensive and useful information to investors.

In summary, it is important to recognize that the economic downturn and financial crunch cannot be attributed to fair value measurement. The underlying issues responsible for these challenges lie beyond the scope of financial reporting in this particular area.

The recent financial crisis has provided valuable insights into the significance of fair value as a tool for differentiating between healthy and unhealthy companies. It is reasonable to assert that fair value measurement is highly beneficial in efficiently allocating scarce resources

Fair value as a market price always encompasses the expectation of market participants about future course of demand for and supply of particular economic good. Thus, market prices, of which fair value is the most powerful representative, play an important role for smooth functioning of market economy and all efforts calling for its suspension are odd

Certainly, there are limitations associated with the application of fair value accounting. While it is important to note that fair value measurement cannot be directly attributed to the financial crisis, there are still several challenges that need to be addressed and resolved.