Before pointing the vıews of the promoters and the protestors of the fair value

measurment some brief history and the detailed definition of this valuation method

will be given at the folowing parts of the essay.

Along with new financial reporting innovations in sporadic areas, there is a

steady process of change of a basic accounting paradigm in order to satisfy the

needs of users of financial accounting.The will of reverse the pattern of declining

relevance of financial information prepare a solid surface for the old historical cost

accounting paradigm to be replaced by the new fair value accounting paradigm by

the the efforts of accounting standards setting bodies 1

The ad hoc history of the conception and application of 'fair value'

measurement within financial reporting reaches back to 1980s.Then the term was

widely applied within the context of acquisition accounting as a basis for the

allocation of entry values to acquired assets.2 Fair value accounting was proposed as

a reform to ensure that financial statements are relevant and reliable as a means of

preventing future crises in the financial institution's industry and the resulting

economic burden to taxpayers. From the very begining stages of the fair value

accounting and historical cost accounting debates SEC actively encouraged the

accounting profession to shift away from an accounting system based on historical

costs to a fair value accounting system.3

1 Barlev, B. & Haddad, J.R. (2003). ‘Fair Value Accounting And The Management Of The Firm’ p.383 2 Power, M. (2010). ‘Fair value accounting, financial economics and the transformation of reliability’p.1973 Cornett, M.M. & Zabihollah Rezaee, Z. & Tehranian, H. (1996). ‘An investigation of capital market reactions to pronouncements on fair value accounting’,p.120

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