Question
Class, I found an interesting research paper on fair value accounting of PP&E under IFRS which allows either historical costor fair value accounting treatment. According
Class, I found an interesting research paper on fair value accounting of PP&E under IFRS which allows either historical costor fair value accounting treatment. According to the research, the authors find that only 3% of the firms use fair value accounting for at least one asset class following the IFRS adoption. Also, companies in the sample are equally likely to use historical cost and fair value accounting (Christensen & Nikolaev, 2012). The study asserts that, at this point in time, companies most often chose historical cost over fair value accounting when given the choice. Why? Possibly, companies believe the process is too costly, time-consuming, provides inconsistent/incomparable financial statements from year-to-year, etc.
Christensen, H. B., & Nikolaev, V. V. (2012). Does Fair Value Accounting for Non-Financial Assets Pass the Market Test? Retrieved from http://faculty.chicagobooth.edu/valeri.nikolaev/PDF/FairvaluePaper_RAST_Conference.pdf
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started