Measuring The Fair Value Essay Example for Free

Measuring The seemly Value Essay financial Accounting measurement seven (FAS 7) guides entities in determining the fairly measure out estimates for the financial statement needs. This is a general rule that is applied worldwide so that figures appearing in statements whitethorn make understanding to all stakeholders. Such unbiased figures allow for be of use incase local companies want to sight internationally, because uniformity in cost or prize measurements are made uniform.Financial Accounting Standard one hundred and fifty seven (FAS 157), is applicable to either financial or non financial additions or liabilities being measured fairly as per authorities on accounting system pronouncements. The absence of a limited consistent framework in fair value estimates for quoted impairments can create inconsistencies or incomparability. The Financial accounting Standards framework does away with inconsistencies on the balance sheet figures as per historical cost and income statement figures. check to Financial Accounting Standard one hundred and fifty seven (FAS 157), fair value is the price received when selling an asset and the amount paid in transferring a liability in a transaction that is taking place on active grocery stores. This price may also be called the go on value. Such prices are determined by both financial and economic circumstanceors and operate at palliate will, while holding different factors constant.It can also be determined by considering that all alive(p) parties are acting at free will and are competing for the few available resources. Fair value in future markets is an equivalent amount in future contracts. This will be an equivalent of the number price just after you have considered compounded interest or lost dividends due to the fact that investors own future contracts but not physical stocks for a particular time period. A liabilitys fair value is the sum for incurring the liability or selling it on every current t ransaction.(Brian, 2007 p.35-45)FAS 157 stress using market input when making an estimation of an assets or liabilitys fair value. Prices that are quoted, data for credits and curves for yields are instances for market inputs under FAS157. Quoted prices may measure fair value most accurately but due to the non existence of active markets other techniques may be used in estimating assets or liabilitys fair value. Under FAS157 assumptions applied in estimating fair value may be from a non related market participants perspective. It will therefore be necessary to identify the market for trading an asset or liability.(Brian, 2008 p.46-52).ConclusionIncase of the availability of more than one market, FAS 157 expects the much advantageous market to be used. Prices and costs for transacting should be considered when estimating the much advantageous market. It can therefore be concluded that fair value accounting is the greatest relevant estimate in financial instruments. Fair value account ing should be retained in financial accounting, because it ensures a true and unbiased view of the financial statements. Financial statements will be a clean representation of an entitys financial and economic position to all stakeholders who business leader be interested in the performance of any publically traded company.REFERENCESAICPA. (2010). Fair value Accounting http//www.aicpa.org/MediaCenter/fva_faq.htm RetrievedOn May 4 2010Brian, N. (2007). Retaining Fair Value in Accounting. London Oxford University Press.Brian, N. (2008). The Need for Fair Value Accounting. pertly York Nerd Press.Gerald, M. (2009). Fair Value Accounting Fraud New Global Risks and Detection Techniques.New York Harcourt and Brace.James, W. (2009). mart to Market and Fair Value Accounting. New York Nerd Press.James, W. (2009). Fair Value Accounting Principles. New York Harcourt and Brace.Mark, L. (2008). Fair Value Measurements practical Guidance and Implementation