Fair value: history, assessment and financial crisis

For the last 20 years fair value accounting has considerably extended its domain. Fair value is a probabilistic market value, which is expected to be obtained on the basis of forecasting of future events, connected with an asset sale or transfer of liabilities. The purpose of fair value is to define a price of an ordinary operation of an asset sale or transfer of liabilities between the market participants, which would have taken place by the date of measurement in the present market conditions. Market value is fair only with an active market, at which prices are determined by demand and supply. This is the reason of a discussion about the use of fair value. The opponents of fair value accounting state that exactly fair value has become a cause of financial crisis and had a negative influence on companies. However, there are many supporters of fair value accounting, who state that fair value is the indicator of financial system significant difficulties and it helps in warning financial crises. The purpose of the article is to validate the economic characteristics of fair value and to analyze its` role in a financial crisis