A Reexamination of the Functions of Fair Value Accounting

What is the objectives of fair value measurement? Over the past few years a considerable number of studies have been made on that subject, but the problem is still in controversy. The purpose here is to explore a little further into the accounting implications and functions of fair vale accounting with special reference to the development of the financial accounting of business combinations. For, in June 2005, FASB issued the proposed Statement that would amend fundamental requirements for measurement in business combinations guided in FASB Statement No.141. This proposed Statement would require an acquirer to recognize an acquired business at their fair value at the acquisition date rather than at its cost. And, it also would require the acquirer to measure and recognize the individual assets acquired and liabilities assumed at fair value as of the acquisition date. The paper examine the functions of fair value accounting as a means of capturing the value of the entity