Accounting Financial Analysis

Running head: Accounting Financial Analysis
Accounting Financial Analysis
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1
Accounting Financial Analysis
Table of Contents
Answer No 1..............................................................................................................................2
Pros of Fair Value Accounting...............................................................................................2
Cons of Fair Value Accounting..............................................................................................3
Answer No 2..............................................................................................................................4
Answer No 3..............................................................................................................................4
References..................................................................................................................................6

2
Accounting Financial Analysis
Answer No 1
Fair value of accounting is the process in which the accountant use the current market
values as the valuation in regards of the asset and liabilities (Magnan, Menini & Parbonetti
2015). It take consider as how much an asset can be sold and how much amount the liability
can be set off. The definition include many concepts such as current market conditions, third
value entity and orderly transactions. As process have some pros and cons so as these process
have and it has given below:
Pros of Fair Value Accounting
1. Valuation as per market value – This accounting method help the management to
record the asset an liabilities in the current market position which help them to know
the real value of asset and liabilities as a result it help to know the financial position
and make strategies accordingly (Palea 2014).
2. Measurement of income as per Time Value – The valuation is based upon the
market value so no one can easily manipulate and even if the price changes the
company can easily know the difference in the asset and liabilities of the company
(Lachmann, Stefani & Wöhrmann 2015).
3. Most used Accounting software – This most used accounting policy and is approve
by all the authority as it is an accurate process which keep track of all the asset of the
company and also it set price as per the accurate value so it help the company to do all
the related transaction regarding the asset and liabilities (Hodder, Hopkins & Schipper
2014).
4. Helps in Survival in Economic Slum – As in historical cost all the value are
transferred upon the book value and does not record the inflation and other economy
factor but in case of fair value of accounting it take all the things into consideration so