Question

what are the factors contributing to the trend toward fair value accounting

Answer 1

Fair value accounting refers to valuation and accounting of the the asset or liabilities based on their fair market values.

Factors that contributing the trend towards the fair value accounting is as follows :-

1. This fair value gives the accurate value of the assets and liabilities as on that date.

2. It does not consists of any assumption about the valuations.

3.every record in this type of accounting has evidences .

4. With the use of this type of accounting the assets replacement will be get easier .

5. This also very much useful at the time of mergers and acquisitions.

6. If we use this type of accounting we don't need any further valuations at the time of mergers and acquisitions.

7. This will be very useful at the time of going for loans . It is very useful to all the lenders to make quick decisions.

8. This accounting system is very economical to the company in terms of finance

9.it reduces the further valuation costs of the company for any of the things like valuation of assets and valuations of liabilities.

These are all the factors that contribute towards the trend of the fair value accounting.

I hope, all the above mentioned points and explanations are useful and helpful to you.