Valuation methods in the reporting of company assets

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Reference no: EM131768991

Question: As you know from courses that focus on financial accounting, an age-old debate exists on balance sheet valuation of assets. The historical cost principle is in effect to lend objectivity to the measure, but has been criticized as being irrelevant as many assets sit on the books for many, many years. Fair value or market value accounting has been suggested as being more relevant [and is in use for certain assets presently], but is it reliable? Thus, a trade-off between the primary qualitative characteristics of relevance and reliability exists.

Which of the two valuation methods should be used in the reporting of company assets on the balance sheet? Please include a reference if you used one.

Reference no: EM131768991

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