Question One: (10 marks) There has been a steady shift in accounting standards over the past few years, moving away from historical cost measures towards fair value. Proponents view this a way to deal with traditional criticisms of accounting valuation while making information more relevant to users. 1. Discuss the role of fair value in accounting. (3 marks) 2. What is the new definition of fair value? Describe the new aspects of the new definition of fair value. (3 marks) 3. The concept of highest and best use to value an asset has been criticised by a number of respondents to the fair value exposure draft. They argued that it may not reflect the actual use of the asset by the entity and therefore provides a misleading valuation for the asset under consideration. Why did the IASB proposed this definition and how is it justified in situations where the use is clearly different? (4 marks)