Fair values and the conceptual framework Find and read the following article: Whittington, G 2008 'Fair value and the IASB/FASB Conceptual Framework project: an alternative view', Abacus, vol. 44, no. 2, pp. 139-68. (There is also a commentary on this paper: Bradbury, M 2008 'Discussion of Whittington', Abacus, vol 44, no. 2, pp. 169-80).

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Whittington argues there are two broad schools of thought in relation to measurement: the fair value view and the alternative view. What are the main conceptual features of these two views? Explain which view you prefer.

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Abstract This paper analyses various controversial issues arising from the current project of the IASB and FASB to develop a joint conceptual framework for financial reporting standards. It discusses their possible implications for measurement and, in particular, for the use of fair value as the preferred measure- ment basis. Two competing world views are identified as underlying the debate: a Fair Value View, implicit in the IASB's public pronouncements, and an Alternative View implicit in publicly expressed criticisms of the IASB's pronouncements. The Fair Value View assumes that markets are relatively perfect and complete and that, in such a setting, financial reports should meet the needs of passive investors and creditors by reporting fair values derived from current market prices. The Alternative View assumes that markets are relatively imperfect and incomplete and that, in such a market setting, financial reports should also meet the monitoring requirements of current shareholders (stewardship) by reporting past transactions and events using entity-specific measurements that reflect the oppor- tunities actually available to the reporting entity. The different implications of the two views are illus- trated by reference to specific issues in recent accounting standards. Finally, the theoretical support for the two views is discussed. It is concluded that, in a realistic market setting, the search for a uni- versal measurement method may be fruitless and a more appropriate approach to the measurement problem might be to define a clear measurement objective and to select the measurement method that best meets that objective in the particular circumstances that exist in relation to each item in the accounts. An example of such an approach is deprival value, which is not, at present, under consider- ation by the IASB.