Financial Accounting
Arab British Academy for Higher Education
UNIVERSITY OF ESSEX
THE ESSEX BUSINESS SCHOOL
10/09/10-04:05:28
The Effect of Applying Fair Value on the Financial Statements of UK Leading Companies
By
Bassam Kazmouz
0948799
Supervisor
Dr Robert Wearing
September 2010
Dissertation submitted in partial fulfilment of the requirements for the award of ACCOUNTING AND FINANCE (MSC)
www.abahe.co.uk
Arab British Academy for Higher Education
TABLE OF CONTENTS
I. Introduction ........................................................................................................... 5 1.1 Overview .................................................................................................... 5 Study Motivation......................................................................................... 8
10/09/10-04:05:28
1.2
II. Fair Value........................................................................................................... 11 2.1 2.2 2.3 Fair Value Concept ................................................................................... 11 Historical Cost Concept............................................................................. 12 Accounting Valuation Methods and Their Problems.................................. 13 Historical Cost ................................................................................... 15 Replacement Cost .............................................................................. 16 Fair Value (Exit Price) ....................................................................... 17 Present Value ..................................................................................... 18 Deprival Value................................................................................... 19
2.3.1 2.3.2 2.3.3 2.3.4 2.3.5 2.4 2.5 2.6 2.7 2.8 2.9
Fair Value Implementation........................................................................ 19 The Reliability and
UNIVERSITY OF ESSEX
THE ESSEX BUSINESS SCHOOL
10/09/10-04:05:28
The Effect of Applying Fair Value on the Financial Statements of UK Leading Companies
By
Bassam Kazmouz
0948799
Supervisor
Dr Robert Wearing
September 2010
Dissertation submitted in partial fulfilment of the requirements for the award of ACCOUNTING AND FINANCE (MSC)
www.abahe.co.uk
Arab British Academy for Higher Education
TABLE OF CONTENTS
I. Introduction ........................................................................................................... 5 1.1 Overview .................................................................................................... 5 Study Motivation......................................................................................... 8
10/09/10-04:05:28
1.2
II. Fair Value........................................................................................................... 11 2.1 2.2 2.3 Fair Value Concept ................................................................................... 11 Historical Cost Concept............................................................................. 12 Accounting Valuation Methods and Their Problems.................................. 13 Historical Cost ................................................................................... 15 Replacement Cost .............................................................................. 16 Fair Value (Exit Price) ....................................................................... 17 Present Value ..................................................................................... 18 Deprival Value................................................................................... 19
2.3.1 2.3.2 2.3.3 2.3.4 2.3.5 2.4 2.5 2.6 2.7 2.8 2.9
Fair Value Implementation........................................................................ 19 The Reliability and