Critical Evaluation of the Fairness of the Fair Value Concept

Abstract

The research exercise is to appraise fairness in fair valuation methodology from the perspective in accounting and finance through analysing the application of fair value method of costing in International Financial Reporting Standards (IFRS) and assessing the usefulness of fair value in improving investor and observer decisions. The research reviews theories and modern trends in the field of fair value and emphasizes the challenges and limitations facing its application. The research highlights the need for clear and specific standards to determine fair value and calls for further research in this area to enhance transparency and fairness in financial markets. Although many studies have shown that the use of fair value is limited due to the need for reliable estimates at a low cost, the International Accounting Standards Board (IASB) and other accounting standards boards have encouraged the use of fair value to improve the comparability and updating of financial information. One of the main findings is that fair value is still not widely used in the valuation of illiquid non-financial assets, in addition to the fact that IFRS standards encourage the use of fair value in the valuation of assets and liabilities.