How 'Fair' is Fair Value?

Fair value accounting has come under a lot of criticism since the global financial crisis of 2008/2009 – how do you calculate the ‘fair’ value of an asset when no market exists for that asset? How accurate is an estimate of the ‘fair’ value likely to be when you are forced to calculate its selling price during unfavourable or volatile time? Move, does fair value accounting, being a market-based measurement, increase short-termism and volatility? Despite the many drawbacks of fair value accounting, Raymond Yuen Wai Pong CFA FCPA, Consultant, Creative Development International, argues that fair value continues to represent the best available methodology for determining and reporting the value of assets.