Question

In: Accounting

Discuss the role of FVA in promoting relevance and reliability in accounting measurements and using a...

Discuss the role of FVA in promoting relevance and reliability in accounting measurements and using a case from a local context depict whether FVA is accepted and widely used in the Pacific.

Solutions

Expert Solution

FVA is fair value accounting which suggest that assets and liabilities of any company should carefully considered and report in the company’s financial book of statement at market condition.

Under fair value accounting, companies are permitted to calculate their assets and liabilities are their fair values. Here fair value means current market based hypothetical value.

Important role of FVA in promoting relevance and reliability in accounting measurements:

  1. FVA enables to get more reliable financial statement data and provides greater accounting objective.
  2. It allows the financial institution to better comparability of the assets as they are converted into actual values
  3. It helps in forecasting by enabling profit making assets and capital of companies.
  4. It helps in providing accurate information and comparison on the current and future performance of the companies.

Fair value accounting is widely using in pacific as it reliable and helps in improving the profitability of entities. This helps in building trust among investors and other stakeholders trust the financial statements.


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