Fair value accounting is increasingly being adopted by many
countries across the world. There are many measurement
considerations that managers need to be aware of when making
subjective valuation estimates of their firms’ financial
instruments. Understanding these measurement issues aids
managers in considering how best to manage their firms’ assets
and liabilities in a fair-value-driven accounting regime. Recent
initiatives by both the International Accounting Standards Board
(IASB) and the US Financial Accounting Standards Board (FASB)
have increased the use of fair value accounting for financial
reporting across many jurisdictions around the world. There are
many issues surrounding fair value accounting. This article
outlines the main measurement issues contained in the fair value
accounting standard used by the FASB (SFAS 157), and that used
by the IASB (IAS 39). The Rationale for Fair Value Accounting
The increasing use of fair value accounting in financial
reporting came about because accounting standa