Financial statements in the United States rely heavily on historical cost information, particularly in the valuation of land, buildings, and equipment. However, International Accounting Standards allow for fixed assets to be reported at their fair values. As an example, Diageo (the British consumer products firm owning brand names such as Smirnoff, Johnnie Walker, J&B, Gordon’s, and Guinness) provided financial statements using a fair value basis to measure fixed assets. In its 2004 annual report, Diageo reported land and buildings with a fair value of £772 million. The assets’ historical cost was £659 million. Why do accountants in the United States focus primarily on historical cost figures? If the £772 million figure is more relevant for investors and creditors, why don’t traditional financial statements reflect fair values? What are the risks of presenting fair value information in the body of financial statements to investors, creditors, and auditors?