AFM401 Chapter : 06 The Measurement Approach to Decision Usefulness.pdf
6 Nov 2013
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Document Summary
Fair value : the price that would be received. To sell an asset paid to transfer a liability in an orderly transaction between the market participants a the measurement date. Value in use : the pv of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Accountants have a responsibility to incorporate current values in the f. s. Responsibility of the user to value the firm by finding info. But accountants have the responsibility to help the users by providing more useful information. In the past, historical cost was used. Now we see more use of current values. Diff theories from diff people no clear answer, just a trend that more current values are being used. Academics want to know how efficient are the stock markets. Not as efficient as claimed by eugene fama.
