Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 2 - Conceptual Framework for Financial Reporting - Review and Practice - Questions - Page 62: 17


Ideally, the fair value option gives companies the option to use fair value. A fair value option allows enterprises to record their fair value in their accounts for most financial instruments comprising items such as receivables, investments as well debt securities. Since the fair value information may be more useful than historical cost for particular types of assets as well liabilities in certain industries, GAAP calls for the use of fair value option.

Work Step by Step

Its important to note that, FASB gives the fair value option to enterprises so that they can promote the fair value option.
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