This report provides a critical analysis of Antonio Marra's article on Fair Value (FV) accounting. The analysis begins with an introduction to FV accounting, contrasting it with historical cost accounting and highlighting its increasing importance. The report then delves into the pros and cons of FV accounting, including benefits for investors, the potential for net profit minimization, and a more realistic view of financial statements. It also addresses the drawbacks, such as book value minimization, lower reliability, and the potential for frequent changes in organizational values. Following this, the report explains the three-tier process of fair value estimation, detailing Level 1, Level 2, and Level 3 inputs. Finally, the report examines the qualitative characteristics of financial reporting in the context of FV accounting, including relevance, materiality, faithful representation, comparability, verifiability, timeliness, and understandability, concluding that FV accounting aligns with these characteristics to aid in the decision-making process of users.
![[object Object]](/_next/static/media/star-bottom.7253800d.svg)
