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Fair value system makes the earnings and the value of reserve more volatile i.e changes the values at any point in time therefore not giving an accurate figure.

Fair value measurement is more relevant to investors and creditors because it reflects the current price of an asset.

Inaccuracy: it seen as the method of accounting which makes balance sheet overstated therefore is resulting to a wrong figure.

Investors need to know what assets are currently worth rather than it acquired

It is seen as a the main cause of credit crunch in the economy.

It can reduce the risk in the balance sheet by increasing visibility.

According to an article, William Isaac, a former chairman of FDIC has blamed the credit crisis on the financial accounting standards which require that assets be valued in terms of their current market value, even if there is no market for them. Their claim was that this caused companies to write down asset values which may inhibit banks' ability to lend.

It shows the impairment of assets.

According to Tom Selling, writer in the Accounting blog, The Accounting Onion, believes people should move away from this method because it is based on exit prices

Due to the fact that investors know what their asset is worth and since he bought them or sold them out, he would know the basic information about that asset i.e the terms and condition and the risk involve then avoid them for future usage.

Its dose not show certainty for information.

结论、意义和建议——Conclusions, implication and Recommendation

Considering the criticism on fair value accounting, my view is that the suspension of the fair value accounting as requested by banks in an article will only increase investors' uncertainty. The idea of considering only historic cost which refers only to cost allocation and not the value of the asset when there is the possibility of the current market value either being higher or lower will not meet the IASC framework of reliability of an asset which is very useful to provide information about the financial positions for economic decision making. It is ideal to say that the fair value helped to expose and reduce the various credit risks that were run by banks. Conversely, the fair value accounting is an essential assumption of a financial statement which is objectivity, qualitative characteristics of information with accuracy for an efficient presentation for the investors and markets as a whole. On the other hand, based on management's responsibility to investors, it will be very unrealistic for investors to be aware that assets invested in has been affected by the fair value accounting, should the current market value fall below the historic cost. With this, the IAS will have to initiate a type of fair value measurement which will motivate investors to invest. Considerably, the criticism was well justified, there is a need to address the fair value accounting.

Base on the preceding information, the argument for and against the inclusion of fair value accounting in financial reporting, the following recommendation will help the economist and the public at large to consider the use of fair value.

I recommend that fair value system of Accounting should be in full use as it aid both investors and economist with a detail