Faculty Scholarship 1994 - Present

Issues in Using Fair Value Accounting in US

The Financial Accounting Standards Board (FASB) announced in 2002 their intent to work with the International Accounting Standards Board (IASB) to make the �existing financial reporting standards fully compatible as soon as is practicable� in a memorandum of understanding jointly issued by the two bodies (now known as the Norwalk agreement). The plan of action called for reducing individual differences between U.S. generally accepted accounting principles (GAAPs) and the International Financial Reporting Standards (IFRS). The convergence project of the FASB and IASB may result in a choice for U.S. companies to use a fair value accounting for their fixed assets, instead of the cost model currently being used. Prior to electing to choose the revaluation model, U.S. companies should consider a number of implementation issues carefully before deciding to switch to it. This paper identifies some of these implementation issues and the possible choices and their consequences to U.S. companies.