ABSTRACT
This chapter is about the adoption of Fair Value Accounting (FVA) by the major accounting standards setting agencies, specifically the International Accounting Standards Board (IASB) and, in the US, the Financial Accounting Standards Board (FASB). FVA in contrast to historic cost accounting (HCA) involves a reorientation from the income statement to balance sheet and from historic costs to the disclosure of market values within a reporting entity’s accounts. Hopwood (2009) observes that the move to fair FVA has been hotly debated. Hopwood’s argument is that whilst one strand of the accounting and finance debate encouraged this shift in calculative and reporting practice, there are also “inherent ambiguities” that need to be explored, specifically, how has FVA been “operationalized in calculative terms” and what are the “wider consequences.” In the following pages we argue that the adoption of FVA needs to be contextualised within the financialized firm in order to best understand its operational impact and wider consequences.
