Question
The IFRS recommends the use of The fair value of accounting. Young et al., 2019 defines this as any type of asset that can be
The IFRS recommends the use of The fair value of accounting. Young et al., 2019 defines this as any type of asset that can be traded or exchanged between willing parties. When companies use the fair value accounting, it is more than likely that they will be able to report the actual value of their assets and liabilities based on actual or estimated fair market prices. This cannot be done utilizing the historical cost accounting, because this method does not reflect what the current market actually shows. A good example of how this approach can be used in the sports industry, could be when teams trade players based on the "fair market prices" on the players and not what those players meant historically 10 years ago. It would be like the New Your Knicks trading Derrick Rose to The LA Lakers for Lebron James and the Lakers are willing to make this trade happen, based on that Derrick Rose once was an MVP instead of today's Derrick Rose who is a bench player and cannot score more than 10 points per game.
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