HISTORIC COST VERSUS FAIR VALUE
Journal Title: Polish Journal of Management Studies - Year 2011, Vol 4, Issue 2
Abstract
The value of accounting registering based upon historic cost is a sure and checkable value, written in a document that certifies a property right upon a certain good, a debt right or a debt. Historic costs’ evaluation consists in registering goods in-comings into the company’s patrimony at their buying cost, namely their historic cost, with no further modification although the real value changes. Fair value is the foundation of IFRS referential which displays basic principles, largely inspired by US GAAP, although they are not mentioned by them. Fair value evaluation is opposed to the principle of prudence, one of the main principles of French accounting law (also taken over by Romanian accounting standards) owing to which only possible losses are registered while potential profits are ignored. The issues that occur refer to the impact of the evaluation according to the fair value upon the accounting data of the company, namely upon the balance sheet and the results account drawn out on the basis of the fair value registrations. At the same time, the evaluation according to the fair value has determined a new foundation in displaying a company’s performance. This issue determines the following question: “Which is closer to the truth and more credible? A result calculated according to the fair value or one which is founded upon historic cost?”<br/><br/>
Authors and Affiliations
Mariana Man, Bogdan Răvaş
Keywords
Related Articles
- EP ID EP518350
- DOI -
- Views 90
- Downloads 0
Improving Accountability and Sustainability Through Value Creation and Dynamic Capabilities: An Empirical Study in Public Interest Companies
Traditionally, value creation is about producing new products and new production processes that add value to the firm reflecting an increase in shareholders’ wealth and customers’ value. However, besides this economic fo...
THE IMPACT OF STATE AFFILIATED DIRECTORS ON THE CAPITAL STRUCTURE SPEED OF ADJUSTMENT IN AN EMERGING MAKRET
This study analyses a unique aspect of the speed of adjustment to optimal debt levels in an emerging market by accounting for the impact of State Affiliated Directors (SAD) on internal governance mechanisms. The paper is...
COMMUNICATION POLICY OF SELECTED EDUCATIONAL INSTITUTIONS IN THE CONTEXT OF ANALYSIS OF FAMILIARITY AND FAVOURABLE ATTITUDES
The article discusses the communication policy of the selected educational institutions in the region of Eastern Slovakia in the context of the analysis of potential customers’ - secondary school students’ familiarity wi...
Management Innovation in Balancing Technology Innovation to Harness Universities Performance in the Era of Community 4.0
The Internet of things (IoT) has changed the way universities managing the people and the way of transferring knowledge. To go with the current trend, universities invest a considerable amount in technology to be acknowl...
GENDER DIFFERENCES OF MANAGING BANKS´ CREDIT PORTFOLIO
The article aimed to demonstrate whether the quality of decision-making on lending to clients in the small and medium-sized business sector is influenced by the gender of the approvers or their direct motivation caused b...