This study critically looked at the controversial issues surrounding fair value accounting approach. The study extensively reviews relevant literature on fair value accounting relevance and reliability to financial reporting. To achieve the objective of the study, the study employed a library research methodology. Findings in this study revealed contentions issues such as: Fair value measurement and verification; financial instrument measurement; cyclical effect of fair value accounting; Also, the study found that, the reliability and relevance of fair value accounting approach is tied to; market liquidity, presence of active market, and uninterrupted market environment; and finally, fair value accounting influences entities’ earnings which invariably affect earnings quality. Based on our conceptual findings, we therefore recommend that: first, there should be an empirical study to ascertain the effect of fair value accounting on firms’ earnings in an emerging country like Nigeria, this will help to know if results will negate or corroborate with prior findings; second, there is need to strive and improve the emerging markets business environments in order to create an active markets for optimal realization of objective of fair value valuation method; finally; standard setters should set rules and equivocal guidelines to limit uncertainties and ambiguities in handling the application of level three of fair value hierarchy.
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In-Text Citation: (Toluwa & Power, 2019)
To Cite this Article: Toluwa, O., & Power, O. J. (2019). Fair Value Accounting: A Conceptual Approach. International Journal of Academic Research in Business and Social Sciences, 9(6), 683–696.
Copyright: © 2019 The Author(s)
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