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:  

 Is ‘Fair Value’ Accounting Actually Fair? (

In this article Justin Marlowe argues that fair value accounting is not fair. To justify his argument, he goes on to say that the government accounting standards board had made new standards on pension liability. Which means it made it to be reported the average value of pension investments over time instead of a specific point in time. With interest rates low and stock market eruptive the investments did not do well. This could lead to higher pension funding costs and less certainty when budgeting for those costs. Marlowe also states that some of GASB’s most important stakeholders have disagreed with its interpretation of fair value. With these standards set by GASB could also have negative effects on other post-employment benefits like retiree health care.

 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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