The International Accounting Standards Board believes that historical cost for financial instruments provides more relevant and understandable information than fair value.

Question

Quizplus · Accepted Answer

The International Accounting Standards Board (IASB) does not hold a categorical view that historical cost is always more relevant or understandable than fair value for financial instruments. Instead, the IASB uses a mixed measurement model that applies different accounting treatments to financial instruments based on their classification and the characteristics of the entity's business model for holding those instruments. Historical cost and fair value both have their advantages and drawbacks depending on the context and information needs of users of financial statements.

The International Accounting Standards Board Believes That Historical Cost for Financial