Fair value accounting is an alternative approach to measurement that seeks to capture changes in asset and liability values over time. Under this approach assets and liabilities are re-measured periodically to reflect changes in their value, with the resulting change impacting either net income or other comprehensive income for the period. The result is a balance sheet that better reflects the current value of assets and liabilities. The notion of fair value accounting is intuitive when applied to quoted investments such as equities, bonds, commodities, etc. that are carried in an entity’s balance sheet at their market value. This form of fair value accounting is often termed mark-to-market accounting. However, while market prices are one aspect of fair value measurement, the term is increasingly being used to describe measurement by other means. For example, accountants often arrive at an estimate of fair value for non-quoted investments based on a model (e.g., a share option valued by applying a specialist option valuation model) or specialist opinion. Such applications of fair value measurement are referred to as mark-to-model accounting. Fair value accounting for assets or liabilities better reflects current market conditions and hence provides timely information.
BASNCO accounting personnel supports and provide advisory service as well as valuation of any assets and liabilities based on fair value approach to organizations to reflect actual economic as well as market value of such assets and liabilities on their balance sheet. And also provide investors valuation of targets assets and liabilities based on fair value for their better investment decision.
The International Accounting Standards Board (IASB) defines fair value as "an amount at which an asset could be exchanged between knowledgeable and willing parties in an arms length transaction.”