An Evaluation of the Implementation of Fair Value Accounting——Based on the American Coporation Financial Reporting Analysis

The accounting industry is in a state of continuous change.In United State,the historical cost principal has traditionally been the foundation of accounting.Until recently,assets and liabilities have been required to be recorded at their acquistion prices,with the exception of designated financial assets and financial liabilities.However,the Financial Accounting Standards Board(FASB) has now created accounting standards that are distant from the cost principal.Statement of Financial Accounting Standards No:157,Fair Value Measurement,issued in September 2006(FAS157,now codified as ASC 820) and Statement of Financial Accounting Standards No:159,The Fair Value Option For Financial Assets and Financial Liabilities,created in February 2007(FAS159,now ASC 825-10-25),significantly increases the viability of fair value accounting.The purpose of this paper is to illustrate the benefit and pitfalls of fair value and corresponding affects on various stakeholders.