+7 495 989 9610, 9am6pm (GMT+3), Monday – Friday
ИД «Финансы и кредит»

JOURNALS

  

FOR AUTHORS

  

SUBSCRIBE

    
Digest Finance
 

On the definition of fair value for purposes of IFRS

Vol. 26, Iss. 2, JUNE 2021

PDF  Article PDF Version

Received: 8 April 2021

Received in revised form: 15 April 2021

Accepted: 22 April 2021

Available online: 29 June 2021

Subject Heading: FINANCE OF ORGANIZATIONS. ANALYSIS OF ACCOUNTING SYSTEMS

JEL Classification: M41, M48

Pages: 148–157

https://doi.org/10.24891/df.26.2.148

Mikhail A. GORODILOV Perm State National Research University (PSU), Perm, Russian Federation
gorodilov59@yandex.ru

ORCID id: not available

Anna A. RADEVICH Perm State National Research University (PSU), Perm, Russian Federation
sunnyann0204@yandex.com

ORCID id: not available

Subject. This article discusses the issue of defining the Fair Value concept, its similarity and identification with the concept of Market Value. It examines the specifics of each particular value, defines the concept of Fair Value, and analyzes approaches (methods) of fair value valuation, clarifies existing problems of determining fair value for the purposes of IFRS application.
Objectives. The article aims to define the notion of Fair Value and appropriate use in accounting, as well as explore approaches to assess fair value.
Methods. For the study, we used a comparative analysis.
Results. The article says of many inconsistencies in the valuation of fair value, starting with the lack of a clear definition of fair value in IFRS, which is actually identified with the concept of market value. It proposes a refined definition of fair value and identifies fundamental differences between fair and market values, which are based on the procedures used in their assessment.
Conclusions. Fair and market values are two different types of valuation. Fair value can be the same as market value, but only if there is an active market available. There is no single concept of Fair Value presented in scientific and special literature. The same approaches are used in fair (IFRS) and market (valuation standards) assessments, but the methods described for each approach are not always the same.

Keywords: International Financial Reporting Standards, Federal Accounting Standards, fair value

References:

  1. Procházka D. The Role of Fair Value Measurement in the Recent Financial Crunch. Prague Economic Papers, 2011, vol. 20, no. 1, pp. 71–88. URL: Link
  2. Sokolov Ya.V. [The future of the International Financial Reporting Standards in Russia]. Finansy i biznes = Finance and Business, 2005, no. 1, pp. 69–83. URL: Link (In Russ.)
  3. Shigufta Hena Uzma. Accounting of Intangible Assets under FVA. Research Journal of Finance and Accounting, 2012, vol. 3, no. 6, pp. 13–22. URL: Link
  4. Elgabali W. The Possibility of Using Fair Value Accounting to Improve the Quality of Accounting Information in Egyptian Banks: An Applied Study. Administrative and Financial Sciences Review, 2020, vol. 4, no. 1, pp. 37–53. URL: Link
  5. Druzhilovskaya T.Yu. [Issues of fair value application in connection with the innovation of its introduction into federal accounting standards]. Bukhgalterskii uchet v byudzhetnykh i nekommercheskikh organizatsiyakh = Accounting in Budgetary and Non-Profit Organizations, 2018, no. 1, pp. 2–10. URL: Link (In Russ.)
  6. Tuyakova Z.S. [Fair value in the system of market assessment of accounting objects]. Vestnik Orenburgskogo gosudarstvennogo universiteta = Vestnik of Orenburg State University, 2006, no. 9, part 2, pp. 199–205. URL: Link (In Russ.)
  7. Mishchikhina N.A., Romanchenko N.N. [Development of the concepts of market and fair value]. VUZ i real'nyi biznes, 2015, vol. 1, p. 214. (In Russ.)
  8. Khoruzhii L.I., Vyruchaeva A.E. Bukhgalterskii uchet biologicheskikh aktivov i sel'skokhozyaistvennoi produktsii v usloviyakh perekhoda na mezhdunarodnye standarty finansovoi otchetnosti: monografiya [Accounting for biological assets and agricultural products in the transition to international financial reporting standards: a monograph]. Moscow, RTSAU Publ., 2012, 197 p.
  9. Rozhnova O.V. [Topical issues of assessing the fair value of assets and liabilities]. Mezhdunarodnyi bukhgalterskii uchet = International Accounting, 2013, vol. 16, iss. 23, pp. 2–8. URL: Link (In Russ.)
  10. Ponomarenko T.V., Sergeev I.B. [Valuation of mineral assets of a mining company on the basis of the option approach]. Zapiski Gornogo instituta = Journal of Mining Institute, 2011, vol. 191, pp. 164–175. URL: Link (In Russ.)
  11. Ignatov E.V. [Assessing the fair value of licenses for the right to use subsurface resources]. Rossiiskii ekonomicheskii internet-zhurnal, 2012, no. 2, pp. 182–191. (In Russ.) URL: Link
  12. Puchkina E.S., Rovnaya A.A. [The position of fair value in the concept of fundamental analysis]. Vestnik nauki, 2020, vol. 4, no. 10, pp. 50–58. (In Russ.) URL: Link
  13. Shulenbaeva G.R., Dzhondel'baeva A.S. [The concept of fair value: Review of foreign studies]. Statistika, uchet i audit = Statistics, Account and Audit, 2020, no. 3, pp. 54–58. URL: Link (In Russ.)

View all articles of issue

 

ISSN 2311-9438 (Online)
ISSN 2073-8005 (Print)

Journal current issue

Vol. 26, Iss. 2
June 2021

Archive