Question

disadvantages of fair value accounting through the help of articles.

Answer 1

Refer below image for disadvantages of fair value accounting , in a detailed way of information.

Answer: Requirement: Disadvantages of fair value accounting : * Fair values may not be readily obtainable for some assets and liabilities like buildings and earuipm As a result, accounting reports may become more subjective and less reliable. because the fair values Companies fair value make it will use of its difficult to compare companies different methods to determine assets (or) liabilities. * using fair values could recult in greater fluctuations in the financial reports since fair value often change from year to year soch volatlity may confuse users of the financial Statements users future it more trends and * to determine trends. difficult for to predict It may also make Corrent operating value Reversal : re-evaluate the even in volatile swings in the Applying fair value accounting, companies corrent value of certain assers y liabilities market conditions, potentially creating large value of those assets is liabilities. * The major disadvantages of fair vale accounting are - Lower objectivity - susceptibility to manipulation - use of teatel 3 inpots Lack of conservatism Excessive income volatility.