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Although market value is able to provide relevant and reliable measures of impairments of an asset or a liability, it can’t provide the same relevant & reliability in case of measuring the appreciation.

Valuing tangible and intangible assets at market value is extremely difficult and time consuming. Some one who accepts the market value for balance sheet measurement of financial instruments has faced greater difficulty in accepting the performance reporting effects. (Hague: 1999)

Although historical cost accounting has some distinguishing features for which its patrons think it better method for measuring assets and liabilities, it can’t provide relevant information to investors. Market value accounting can able to eliminate this limitation by providing current and inflation adjusted information to investors. Therefore, market value is the best alternative to historical cost. But there are also several significant problems within market value accounting in its current application which make more users reluctant to use market value in measuring assets and liabilities.

As investors are the major users of financial statements, priority should be given to their wants, that is, which measurement they prefer- historical cost or market value. Empirical evidences show that investors want both measurements. They want reliable and transparent market value information to determine the actual value of their investment. They also want historical cost information that helps them to determine whether management has discharged the stewardship entrusted to them. Therefore, assets and liabilities should be measured and reported at market value and these measurements must be reliable, verifiable &transparent and these measurements should not be at the cost of abandoning historical cost information.

A process can be created and implemented whereby historical cost and market value information is reported side by side, which will enhance relevance, reliability and comparability. In addition, some actions should be taken to eliminate the current limitations in market value accounting. These may be:

Establish more robust accounting, valuation and auditing guidance.

Provide more education to preparers, auditors and users about market value accounting.

Therefore, it will not be good for any one if the debate between the two approaches will be ongoing. Rather, Focus should be given to implement market value accounting in reporting all assets or liabilities to reflect their true value without eliminating historical cost accounting 。

It has been argued that fair value accounting information is more relevant but less reliable then the historic cost model. Benzon and Joshua (2003) argue that historic cost accounting based financial statements obscure real financial position and the results of operations of a firm provide ample room for manipulation. Benzen and Joshua (2003) furthered criticize by suggesting that the historical book value of assets and liabilities has only a remote association with market values. This situatio本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。