Question: Using fair values came under attack in light of the credit crunch of the last decade and the related financial crisis. Some have even accused

Using fair values came under attack in light of the credit crunch of the last decade and the related financial crisis. Some have even accused fair value accounting of exacerbating the crisis. Access the following articles:
"Discussing the Credit Crunch," IASB INSIGHT Journal, Q1 and Q2 (from www.iasb.co.uk), and "Fair Values: "When the Engine Overheats, Don't Blame the Oil Light," by Paul Cherry and Ian Hague, CA Magazine, June / July 2009 (from www.camagazine.com).
Instructions
Using the articles, address the following questions:
(a) "What impact does using fair values to report assets and liabilities have on the financial statements?
(b) "Why do some believe that using fair values is not appropriate for financial reporting? Discuss this in light of the financial crisis that began in 2007.
(c) "What are the arguments to support using fair values in financial reporting?
(d) Do you think fair value accounting should be used in the preparation of financial statements?
(e) Does IFRS allow for greater use of fair values? Discuss giving examples.

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ARGUMENTS FOR AND AGAINST THE USE OF FAIR VALUES IN LIGHT OF THE FINANCIAL CRISIS a Using fair values means that assets are valued at what they could be sold for in an open market When the changes in ... View full answer

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