Doron Nissim

Principles for the Application of Fair Value Accounting

Coauthor(s): Stephen Penman.

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Abstract:
This paper, the second in CEASA's White Paper series on accounting issues, lays out principles under which fair value accounting satisfies the objective of reporting to shareholders. Its "principles-based" approach embraces broad economic concepts but is also pragmatic and specific enough to guide practice. Accordingly, the pros and cons of fair valuing bank loans, core deposits, inventories, investments in subsidiaries, insurance contracts, performance obligations, and debt, to name a few balance sheet items, are addressed. Financial statements for reporting fair values in selected industries are proposed at the end of the paper.

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