Fair value: Much debated but here to stay

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David Larsen outlines the latest developments in the fair value accounting debate.

As the global economy begins climbing out of recession, the G20, other world governments, the International Accounting Standards Board (IASB) and its US counterpart, the Financial Accounting Standards Board (FASB), are focused on establishing uniform accounting standards. The accounting principle often blamed for contributing to the recent financial crisis – fair value or market-to-market – is once again at the heart of the debate.

Some claim that fair value accounting contributed to the financial crisis of 2008-09. Others maintain that fair value accounting allowed investors to quickly identify and react to massive decreases in market value. Despite this, the debate continues over which a...

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