Måling til dagsværdi: Teoretiske, praktiske og økonomiske problemstillinger

Anders Arentoft & Carsten René Røjgaard

Student thesis: Master thesis


Recent years have seen accounting move towards the fair value convention. This thesis explores the fair value convention both in theory and practice as well as its influence on real economy. IASB conceptual framework states that the objective of financial reports is to provide information about financial position, performance and changes in financial position of an entity that is useful to users in making economic decisions. A comparison between the fair value convention and the historical cost convention to conceptual framework shows, that there is both advantages and disadvantages when using either one of them. The fair value convention is said to have the following features: it is balance sheet based, focusing on performance being the result of changes in the carrying values of assets and liabilities rather than a matching between income and expenditure. It focuses on the fair values of assets and liabilities. Fair value is defined as: “the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction”. Fair values are ‘current’ values at any balance sheet date. They are in essence based on discounted future cash flows. Proponents of fair values argue that their use gives users of financial reports more useful information, as it is more up to date and reflective of the real value of an entity’s assets and liabilities at any point of time. However there are difficulties in the practical application of the fair value concept, both in terms of its definition and its measurement, which could have a negative impact on the reliability of the information provided in financial reports. A study of the fair value convention in IFRS’s, including those for financial instruments and investment properties, shows that there are different kinds of measurement bases. Thus mixed measurement exists in financial reporting. The study show that IFRS’s contain a fair value hierarchy, where quoted prices is preferred if available. If quoted prices are not available, then fair value is measured at present value of future cash flows. The current financial crisis has resulted in markets that are no longer active. As a result IASB have made it possible to reclassify financial instruments to amortized cost measurement. Due to the difficulties in the practical application of the fair value concept, the IASB have launched fair value measurement project to provide guidance on fair value measurement. An analysis on the implications of fair value convention on real economy is made on financial statement analysis, business valuation, banks financing business and share-based payment. The analysis suggests that fair value measurement has implications on financial statement analysis, especially when financial reports contain mixed measurement. Furthermore the analysis suggests that fair value measurement has practical implications when using business valuation methods. The analysis also suggests that fair value measurement enhances banks procyclic nature. Finally the analysis suggests that fair value measurement increases the risk of “earnings management”.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2009
Number of pages130