My Post:   The link to the chosen article is


My Post:  

The link to the chosen article is 

By addressing the controversy around fair value accounting, the author of this article dismisses some myths related to this accounting technique. First, during the financial crisis of 2008, one third of the banks’ assets were marked to market rather than all banks. Second, regulatory capital is not written down by all write-downs. Third, alike fair value accounting, when the companies use historical cost accounting method, changes in markets are to be acknowledged by them as well in the form of permanent impairment to assets. A keyway to address this controversy is to start using new transparent practices using both fair value and historical accounting1

I agree with the author because fair value accounting cannot be alone held responsible for the occurrence of 2008 financial crisis, as the reckless behaviour of the top executives to lend unprecedented number of loans was to blame as well. 

The implication of this article can be seen in an increased adoption of fair value accounting by the banks to accurately reflect the market value of their assets. As the author is suggesting using both fair value and historical cost accounting, it will be possible for the banks to undertake a better measurement of their assets using both measurement techniques.  

As a use of financial statements, I want to see fair value accounting as it would ensure that the changes in the markets are reflected in the assets’ prices, which would lead to more relevant financial information to assess a company’s financial position.  


1. Is it fair to Blame Fair Value Accounting for the financial crisis? [Internet]. 2021 [cited 2023 May 24]. Available from: 

My Peer post:  

Why “Fair Value” Is the Rule (

I agree with the author that “Fair Value” accounting is the rule that is most commonly used, especially as of late in many businesses, including the financial services industry. From research the author has done, companies in the financial services industry are using fair value accounting to prepare their internal risk-management reports, defining profits on a fair value basis rather than against historical cost, and providing a “boost” to M&A activity (Mergers & Acquisitions). These three things provide an avenue for executives to push for tweaking of figures to make it seem like their profit is higher than it actually is, realizing gains sooner, and increasing future revenue.

As of the date of the article, 1/4th of the FASB board is made of individuals with backgrounds in the financial services industry, which indicates a shift back towards using fair value accounting, rather than historical cost accounting. For a user of financial statements, I would like to see the usage of historical cost accounting due to the fact that it based on data that has a reliable source, even if it doesn’t mean the data is relevant in every case. The only advantage that fair value accounting has over historical cost accounting is that the data is relevant all the time, but on the other hand, is never reliable for short/long term managerial decisions for the business.

Answer the following questions: 

In your responses to peers, review the articles they found and discuss whether you would have responded in a similar way. Discuss similarities and differences between the articles chosen by your peers and your own. Do you agree with the thoughts of your peers regarding their preference of fair value accounting or cost accounting?

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