In 2016 financial commentators noted that a push by the FASB to expand the use of fair value accounting had rekindled the debate about its costs and benefits. Discuss the trade-offs between relevance and reliability that result from the use of fair value accounting as opposed to historical cost accounting. As a preparer of the financial statements do you prefer fair value accounting or historical cost accounting? Why? How does increased usage of fair value measurement affect the auditor of the financial statements?

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Fair value accounting and historical cost accounting represent two contrasting approaches to valuing assets and liabilities in financial statements ea... View the full answer