ABSTRACT
Finding themselves in a blind alley, the accounting standards bodies are clearly determined to press on as far as they can. ‘The use of fair values [is] the goal towards which it appears the IASB wants to move financial reporting’ (Ernst & Young, 2004: 126). And ‘fair value accounting’ is about as far as it is possible to go. The fair value model relies on a concept of value that comes close to the ‘theoretical ideal’ of determination by the forces of a freely competitive market.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
(IASB, 2005: 1672)