Which of the following is an advantage of fair value accounting for financial assets over historical cost accounting?
A) Asset values tend to be more relevant.
B) "Gains trading" to manage earnings is less likely.
C) All the assets are measured at the same date, making adding the values together mathematically meaningful.
D) All of the above.

Question

Quizplus · Accepted Answer

A) Fair value accounting provides more relevant and up-to-date information about the assets since it reflects market fluctuations and can better capture the changes in the value of assets.
B) Fair value accounting reduces the incentive for companies to engage in "gains trading," where they manipulate the timing of gains and losses to manage earnings.
C) Fair value accounting ensures that all assets are valued at their current market value, which makes it easier to compare and aggregate financial information.

Which of the Following Is an Advantage of Fair Value