The Fair Value (Balance Sheet) and the History Research - 275 Words

The Fair Value (Balance Sheet) and the History Research (Essay Sample) Content: Fair ValueNameInstructorDateFair ValueHistorical cost is the measure of value which is used in accounting whereby the price of an asset on the balance sheet is considered by its normal or original cost when it was acquired by a company. Historical cost method is mostly used in the USA in accepting accounting principals known as GAAP. Fair value is the estimated value in all assets and liabilities of a given company that is used to consolidate the financial statements of both of the companies. Fair value is an equilibrium price for contacts in the future.Historical cost is in line with the fundamental qualitative characteristics of the conceptual framework since relevant financial info is capable for making a difference in a decision made by the user and in order for this financial information to be differentiated, predictive value and confirmatory value must be predicted.Fair value hierarchy plays an important role as the hierarchy categorizes the valuations. Through hierarchy certain levels of input to measure fair value are set. Level 1 input, a quoted market price which is active in market provides a more reliable evidence of the fair value which is used without being adjust to measure fair value if available a...