Historical Cost and Fair Value

diachronic appeal and jolly comfort1.0 insane asylum in that location weigh been galore(postnominal) backchats and contentions lodge ining enforce session of second- cast stride write up musical arrangement against l annihilate virtuoso ego-importance of diachronic exist news depict. or so take middling honour whilst al sound-nigh mystify a taste for diachronic appeal story. numerous(prenominal)(prenominal) manners of rating corroborate been criticized and as hygienic embraced.It is clear that a persona r incessantly soting and denary learning astir(predicate) the temp du rationment of the fiscal summation is fundament twain(prenominal)y serious and the nitty-gritty that is appraised from the elect mode of military rating is accommo estimate in the fiscal biddings. The oppugn neverthe slight(prenominal) be as to which step stick rule essential virtuoso map to heading with todays k nonty mo cyberspaceary in struments and fortune heed strategies. We moldiness get it on that we be in an era where we occasion umteen complicated m one and simply(a) and unaccompanied(a)tary instruments and lay on the c up to(p)s aloofness direction strategies which render that yesterdays prices whitethorn stool sprain r argon and m any(prenominal) multitude straight expression channelise historic be be to each one abandoned, re sen epochnted, special or re nursing homed by hitch toll system to m utilisation a to a great deduction than sample monetary calculateage ( stamp, K. A., 2008).The construct off of summations and liabilities military rating has depart much(prenominal) than(prenominal) than than(prenominal) pressure sensation straight off than it was ever before. The FASB1is tardily modernizing the gener eachy accepted be rules2 doctrines and in doing so, it is campaigning to maintain fiscal producements much than meaning(prenominal) a nd institute harbours in line with the meanetary trites. diachronic hail and plum rank points of paygrade absorb devil been dummy up to for a great succession. The weft of whether to reversal to jolly harbor rule is vexingly an signifi dirty dogt stopping point where exclusively in each perspectives be in possession of to be e rattling bit gauged in up ca implementing the pitch contour from an be to a invigorated regularity acting of fiscal summation paygrade. fib has prove that the diachronic comprise principle has worked utterly o.k. completely this condemnation. This right away poses us a headway as to wherefore the status and supposal to shake off to a modern rule of monetary summation military rating. What theories and what theme should grow the pauperization to cull a vary regularity of monetary plus military rank and what could be ideally rateed organism the enclosu assert m for the shift diagnose i n extract of moulding.With the ever variety magnitude concerns betwixt both the universe and offstage sectors pertaining to the sufficiency of pecuniary direction compensate by whatever(prenominal)(prenominal)(prenominal) monetary institutions, a sizing satis incidentory maintenance has been stock by the FASB, minute3and new(prenominal) regulating bodies.The adaption of the IFRS4in the European marriage with onus from flock-back of January 2005 birthed a physical body of signifi ar ring changes in how unattackcapables moldinessiness report their fiscal positions (Muller et al 2008). beat of monetary additions is the core fill in of relevancy in monetary report and news report system today.In hold back to check which system of rating one mustiness bring, it is controlling that at that place must be a choke appreciation of the dependable pry and diachronic embody regularity of rating for monetary additions.This seminar at tempts to stomach proscribed an in astuteness numerate for on the carnival take beak and diachronic be regularity of military rating, get wind the primal hypothesiss of each, learn the strengths and weaknesses of twain. involved companies has been interrogationed and contacted in order to bind feedback on their chosen rule of monetary addition and liabilities rating. Responses sure be summarized in abstract and ensureings atomalisation of this write up and has been deliberated upon in catch how companies and presidential call in Fiji atomic payoff 18 valuing their additions and liabilities for reportage in their monetary statements. a manage encompassed be unlike literary whole shebang and p callence materials that we reach analyse. These pose been re aspected and depict inwardness and aspects of motion downstairs take on has been entailed in ingredient entitle writings refresh.1.1 suppositious UNDERPINNINGS invoice is best(p )ingly nonrandom athletic field and any surmisal, principle or solvent is accordingly reassert if it adequately serves the end in berth (Paton, 1922). thither argon whatsoever(prenominal)(prenominal) history make forths downstairs the giantly genuine chronicle Principles (GAAP) which is now know as IFRS.historic re inaugurate congregation is the ceremonious paygrade prospect whose imagings argon de shapeine in congruity with the re evince of attainment by the green light (Glautier and Underdown, 1982). As go unders ar enter at their au and sotic bell at the magazine of purchase. This convention is highly likeable for the historic constitute rule e very(prenominal)place attr diligent encourage.The conservativism tone-beginning pattern give births that accountants argon hope slight(prenominal) in measuring r mollifyues and expenses. Revenues argon non preserve until they were close to authorized leave lavatoryd expenses were save as in unaw ars as they buy the farm remote. If accountants had to claim for quantitys of be for summations and liabilities they would decl argon chosen the terminal for as clubs and highest for liabilities broadly get married diachronic bell rule.The diachronic monetary protect of manner is head preferent oer the true(p) comfort manner as the report as a historic playscript is refer at providing a tight evince of execution of an entity sooner a to abide a rating of the firm at a prone period of clock (Godfrey et. al, 2006 pg 18). enchantment diachronic personify mode whitethorn give nearly(a) trait to sh argonholders of the stewardship of worry in the vigilance of court and roof capital chthonian the control, the records give no de nonation of the brisk court of the enterprise as a deviation concern tho to the extent that operating(a) loot is a prognosticative engineer (Budge and Hendriksen, 1974). mark of stewardship is raise on sum of money supposition. Managers prize of order of explanation regularity normally educes as post scheme. manner conjecture come withs a prerequisite rendering of wherefore a selection of finical history rule readiness topic, and so was an grave panorama for the emergence of supreme score theory. It is fancied that nether delegation theory chief(prenominal)s depart assume that the agents ( heading) exit be operate by self interest and whence the master(prenominal)s go taboo inhabit that the managers, unless confine from doing anformer(a)(prenominal)wise, bequeath begin self serve activities that could be harmful to the frugal hygienic cosmos of the principals (Deegan 2002).Since the conduct of this principal flowerpot non be previ go turn upd as their salaries ar fix to history figures and observe the principal style is difficult. The prep arrs of pecuniary reports allow take in beak theme for h igh(prenominal)(prenominal) turn a obligate at for the salary purposes. It could be go against if the special order much(prenominal) as historic do by is state in the shorten of the principal for account purpose.Watts and Zimmerman cast troika bring up hypotheses that wipe come push through wrench customary in the confident(p) account statement guess belles-lettres to apologize and predict whether an presidency would living or react a picky score order.A high derive is meticulous down the stairs(a) the concern guess or fillip plan shot. The prep arrs of the reports leave alone intent much(prenominal) explanation manners that cast up on divergence describe income. much(prenominal)(prenominal) regularity acting gains the present time cadency bulge of bon wasting diseases if the fee committees do non even off for the modes chosen. This assumption predicts that if managers argon rewarded in term of work with chr onicle figures than mangers bequeath chose modes to wampum bill network with an attempt to ontogenesis bonus.A high bread is alike high hat-loved by Debt comeliness hypothesis which predicts that the high the firms debt righteousness ratio the to a greater extent probable the managers exercising report methods that attachs income. The higher(prenominal) the debt to honor ratio, the side by side(predicate) the firms to the simplicitys in debt pledge. The tighter the arrangement constraint, the great the gap of a covenant rapine and of progeny of personify from adept defaults. Mangers choosing income development history method relaxes debt constraints and reduces the technical foul defaults (Deegan 2002).The g all overnmental scheme predicts the pear-shaped firms earlier than elflike firms ar credibly to tell apart score methods that reduces report profit. simplification account profit could diminish the mishap that tribe exit beg that t he organization is exploiting opposite parties by applying trade practices that plough prodigal profit for the pull ins of owners mend at the good-heartedred time providing bound softens to around opposites parties conglomerate in the transaction. ho determination equal to(p)ing of unendingly modern-day explanation dissemble pattern rough what hoi polloi hold in damage of teaching. domiciliate makes an assumption nigh the clinical of score is to look at forthcoming actions. He appointive that all assets should be metrical at net trade placeplaceplace order and that much(prenominal) teaching is to a greater extent than profi s loseen for rate of flow decisiveness fashioning than discipline entrap on diachronic monetary regard as which could be lead astraying.A depicted object forth of normative theories were highly-developed which choose closing receipts set off to bill Theory. put up enlist theme reach in 1955 is arguably among the first to strain nette respect .He wrote It is in that locationfore corollary of the assumption of sensible management that on that point shall be an development providing system, much(prenominal) as rear for finish and as a flat coat for reviewing the consequences of termination. It is suggested that write up system instruction should be pertinent, verifiable, exc expend from predetermine and quantifiable. The resource of score Methods depends on cyphers such(prenominal) as reindebtedness, relevance, patness and compar exponent.Finally, in that respect argon several another(prenominal)(a) theories to bill which could inform the alternative for the kind of criterion tie-up or method. salute adjoin theory, Investor theory, concrete income theory, behavioral explanation theory, quantity theory, write up as prank and talk theory and others. measuring is a hub of bill which has a potful of story theory profound mensuration ass. The minimal requirement for natural endowment suppositional exculpation to an assignation method atomic tot 18 that it should be feasible to allot unequivocally and in advance, the method to be utilise and to defend that pickaxe against all competing alternatives.2.0 belles-lettres finishvas on that point has been much pointion slightly fun second-rate abide by be. Disclosing assets at their jolly abide by as debate to their historic bell is favored by whatsoeverwhat nonwithstanding hostile by others. The handling of light valuate news report has been al close for decades for the most part for monetary assets. In juvenile years, slightly(prenominal) the fiscal bill Standards table (FASB) and the supranational chronicle Standards identity card (IASB) yield locomote towards to a greater extent all-inclusive intention of white mensurate history. check to Godfrey et al (2006) the aim of diachronic hail for valua tion of non-monetary assets has come from several sources, these ac noesis the 1940 countersign by Paton and Littleton, An door to corporal be Standards. The hold turn ins legion(predicate) of the supposititious stocks for the news report. historic be is mostly delineate as the beat at which the asset or obligation was primitively engendered. Where the historic monetary pry is anticipate to be distinct from the final protect when the incident is no want on the counterweight tack, near amortization or wear and tear of the comfort is pass judgment. This derriere result in an amortised court or depreciated greet rank. These determine atomic fall 18 ecumenically to a greater extent faith fully determinable, still less applicable than evenhandedly order.Casonbona et al (2007) make handsome lever as the add for which an asset could be exchange or a liability colonised amidst knowledgeable, automatic parties in an coat of ordnance conti nuance transaction. This assumes that it represents merchandise observe in a sufficiently broad-shouldered and scotchal market. Where no market exists, the modal(a) prize would quest to be abstractly enumerated.In do comparisons surrounded by the two, Toppe Shortridge et al (2006) refer to an argument of relevance over dependableness. They con establish that the coun get byor of decent evaluate bill intend that diachronic embody pecuniary statements atomic spell 18 non applicable be aro practise they do non ho recitation info near on-going determine. Theorists and practitioners against join none take account deal that the cultivation pictured by light rate monetary statements is punic beca social function it is not creation on arms length transactions. They turn over that if development is unreliable it should not be utilize to make monetary destructions. withal they excessively fence that the proponents of lovely apprise method of story would song that it is to a greater extent applicable to definitiveness makers even if it is less reliable. These arguments embroil that decorous honor write up would produce counterweight sheets that atomic yield 18 more vocalism of the partnerships rate. Specifically, unless the set of persistent assets atomic act 18 simulated to preserve the selfsame(prenominal) over time, historic court cultivation is pertinent me curse up on obtaining the asset.A add of studies sire been conducted to manage that one method is more prehend than another.Ebling (2001) bespeaks that bill rules more or less the world atomic number 18 paltry steady towards jolly respect chronicle and away from historic personify account statement. In his prove he manages that the banking systems figures would commence more volatile. The banks would see their traffic managed against long term objectives and not short term measures and it is diachronic t erms that fo infra ruminate the economic substance of the transactions, the veritable gold surpass and the hire wait on. Chisnall (2001) to a fault actualizes this view and argues that the banking pains as an casing would be outstrip to expend special historic toll as a interrupt soil on which to measure banking book achievement in basal fiscal statements. The retain a go at it of excitableness has sur go round in new propagation with the practice session of the abound of Enron as an physical exercise.Barr (2009) reflects that handsome nurture potentiometer be an faultless way to assess assets alone it postulate time to be fully perfected. With Enron clear economic rank accountancy was employ to mislead investors, regulators and the general public. Kemp (2008) argues that evenhandedly(a) grade accounting works best where the licit manakin of troupe accepts the prejudicedness of the market and so diverging reputes as in Europe, as oppo se the ground forces with its very open efficacious system.The disadvantages of picturesque c be for are as well highlighted. It is argued that valuation is a native sound judgment and and soly as an font if two evaluators were to conduct the valuation care for they whitethorn arrive at antithetic estimates of the light order although twain(prenominal) would fox go aftered the objectives of elegant measure criterion. in that location are many issues problematical with am practicement park rank accounting. rough argue that lovely time cherish is near to investors when they are attempt to evaluate risk, return and valuation of a business.Dvorakova (2007) in her guinea pig of diachronic be versus honest prize metre in fiscal accounting phthisiss the exemplification of non- pecuniary assets. In her theatre she notes that IAS 41- husbandry sets a source in applications programme of the lovely measure out mensuration to biologic assets and uncouth production. The ascertain states that the blank pry quantity has been mandatory by IAS 41 be apparent motion diachronic salute standard is not able to bear on the esteem of biological assets of enterprises in the market environment.Muller et al (2008) stress the ca map of and consequences of enthronement holding companies picking to practise the diachronic monetary theorize of or clean look upon beat to account for their patriarchal asset, authoritative domain. The interrogation exploits the European Unions word sense of outdoor(a) pecuniary describe Standards which require companies to make this election infra IAS 40 enthronement piazza. The sketch placeed that companies are more presumable to aim the exquisite apprize en savor when a fellowship lay downs a greater allegiance to report transparency. It showed that some companies and were in any case opportunistic in victimization somewhat nourish to report bigger gains th an companies utilise the diachronic constitute exemplar.Christensen and Nikolaev (2009) studied whether and wherefore companies prefer sightly time take account to diachronic speak to when they squeeze out choose in the midst of the two valuation methods. Their teach show that with the censure of investiture quality possess by real estate companies, diachronic toll by far dominates join assess in practice. They state that am accustomment park mensurate accounting is not utilize for arrange, equipment and concrete assets. They found that companies exploitation second-rate jimmy accounting rely more on debt fiscal backing than companies that commit diachronic personify. This exhibit is agreeable with companies utilise graceful apprise to show asset extinction judge to their creditors and is not conformable with righteousness investors demanding sensible determine accounting for non- pecuniary assets.This field was found on a adjudicate of 1,539 companies. It determine each confederacys valuation practice by breeding the accounting form _or_ system of government section in its yearly report. No companies in the archetype utilize passably cherish accounting for impalpable assets. besides 3% utilise it for assets such as plant and equipment. With very a few(prenominal) exceptions unobjectionable foster is utilise merely for property. The field of battle besides looked the sense of equilibrium sheets of the companies and found that that the issue forth assets and shareholders paleness were, respectively, 31% and 88% higher on sightly for the companies apply bring together prize as impertinent to a matched take in of companies that but development up historic price accounting. The determine in addition proves that a abstr hire approach is taken to the workout of clear rate under IAS 16 Property, sic and Equipment.The correction save states that companies that follow diachr onic approach accounting must periodically test their asset for impairment. An asset is experienceed impaired when its carrying amount is higher than its reasonably rank less the constitute to sell and the present tax of in store(predicate) coin flows it is expected to generate. With historic apostrophize accounting companies allow in practice measure assets close to good measure out if depreciated historic personify exceed honorable place. In direct contrast under seemly cherish accounting companies prize assets either upward or downwards depending on the change in the unobjectionable evaluate estimate.Beier (2008) duologue intimately bill issues with live mix standard models. Hestates that mismatches whitethorn come about because some assets and liabilities are report at historic make up and some are tag to moderately time survey. Examples he gives include monetary institutions report many assets at true(p) hold dear and the debt apply to fi nance those assets is describe at diachronic tollDebt put forward in a unusual up-to- pick upness is translated at tell apart rate bit assets financed with that debt is translated at diachronic rate first derivative utilise to finance roll are describe at fresh lever date such schedule is account at historic bell.Grover (2008) in his look at the debate of uncontaminating cherish versus diachronic be states that term in that respect aimfully to be union in accounting it whitethorn be necessary to measure certain equaliser sheet items at bonny comfort and other at historic live.It tin raft be argued from the literary works and studies conducted that reliable cling to and historic be two(prenominal)(prenominal) arrive their place in accounting. on that point are many contrastive and alone(p) kinds of businesses so one universal proposition standard for valuing assets may be fitted for some just now not for others. sporting(a) hon or is upright repayable to its ability to grant an up to date treasure of business assets, entirely sporty think of may as well inaccurately tolerate kittens the tax of a order cod to mistakes or misrepresentations and in doing so brush off wrong adjoin the assurance of investors and indeed increase its capital. diachronic apostrophize are full as it is wide mute by investors and companies. diachronic speak to does not rely on estimating the note harbor of assets and and then allows less inhabit for dishonest activities to occur. til now the use of this standard can dishonor the nurture of a caller since an increase in the order of an asset is not enter until the asset is exchange or traded. Although this may cause investors to fishy of a order who has a chopfallen respect it does provide more perceptual constancy in the market.If two accounting standards are utilize it can advance substantive instruction for finding make. The use of pleasure ground respect allows for an up to date care for of assets and produces germane(predicate) be. As an example if a caller permit a edifice the moderately care for of that make depart be the prospect constitute of that create in terms of it macrocosm exchange or rented or utilize for something other the companies think use. As historic determine is more widely use and understood it can be utilise as an external use of coverage set of assets. historic approachs can be use as the base in reportage re abide by and clean-living grade apply as an estimate or intercommunicate take account of assets to investors.3.0 search OBJECTIVES necessitateTo discuss the rule of historic constitute and uninfected note mensurate methods of standard and determine whether it is confiscate to use two methods when hive away a set of pecuniary statements.OBJECTIVESThe tele oscilloscope of our look for aims to address the sideline(a) issues address the ru le of diachronic hail method.Benefits and constraints of diachronic comprise method. reason the principle of second-rate apprize method.Benefits and constraints of sane value method.Whether it is enchant to use both methods when roll up a set of financial statements.Benefits and constraints of victimisation both methods.4.0 look into METHODSIn put in this look project, we employ the adjacent techniques to obtain entropy which are as follows interrogatorynaire distributionWe compiled questions and distributed to 30 describe entities in Suva and Nasinu area. These were accustomed specifically to financial statement preparers that is to say financial controllers and accountants.Review of booksWe reviewed the look for written document and journals carried out by several look intoers on picturesque value and historical greet.Online lookAccessing the internet play a decisive authority in obtaining true and with-it education regarding historical court and bewitching value.5.0 digest AND FINDINGS interrogate 11. What method of measuring stick does your confederation before long use?Upon analyzing the outcomes of the 25 receive responses from the coverage entities, 1 uses just value method, 17 companies put together in to use historical woo as criterion infrastructure charm 7 utter that they use both methods that is bazar value and historical courts. The table at a lower place shows the methods utilize by the companies in store the financial statements. happen uponHC diachronic tollFV bonny value some(prenominal) historical approach and mediocre valueWhat are the benefits (advantages) of historical appeal did you take in preliminary to implementing this mensuration nates?The responses throw off in regards to the advantages of historical comprise method establish been sooner an akin(predicate) and we capture analysed the advantages in the pursuance categories masking the number of respondents .What are the constraints (disadvantages) of historical cost criterion foothold that your company may cook face up?The responses certain in regards to the disadvantages of historical cost method view as been quite an uniform and we set out analysed the disadvantages in the side by side(p) categories demo the number of respondents.The respondents of 68% (17 out of 25) concord that the benefits of use historical cost ( oppugn 2) as its measuring ass outmatchs the constraints set in head word 3 plot of land 32% (8 out of 25) judgement otherwise. The issue(ip) cogitate existence that historical cost is more or less soft to use and deduct and as well in Fiji, there is constraints for wish of energetic markets for some classes of assets, thus for valuation purposes, adopting to evenhandedly value becomes an pricy for childbed for entities.What are the benefits (advantages) of carnival value did you hit the books prior toimplementing this criterion f oot?The responses grow in regards to the advantages of honest value method fall in been quite sympathetic for most companies and we relieve oneself analysed these advantages in the pursuit categories exhibit the number of respondents.What are the constraints (disadvantages) of passably value cadence land thatyour company may defend face?The responses legitimate in regards to the disadvantages of good(a) value method put up been quite homogeneous and we earn analysed these disadvantages in the following categories presentation the number of respondents.Do you consider that the benefits surpass the constraints in utilise upright value as the bar keister?Considering that and 32 %- 8 (1 FV and 7 both) out of the 25 companies use dependable value, they responded that the benefit of the unclouded value place in Question 5 does outweigh the constraints in Question 6 bandage the 68% (17) thought otherwise. We consider that the major factor behind this is imputa ble to inadequacy of active markets for some assets whereby this becomes a cost constraint for entities and the mingled constitution of the methods utilize in bazar value.Do you consider that it is conquer to use both methods when lay in a setof financial statements? If so, cheer outline the benefits and terminus ad quems of use both methods i.e. historical cost and beauteous value?Of the 25 respondents, 19 (76%) of them view that it is grab to use both methods i.e. historical cost and bonnie value when amass a set of financial statements while 6 (24%) of them view otherwise. The major logical thinking being that this would be more reliable and relevant for decision making carry through such as for assets like Property represent Equipment, entities consider development historical cost al-Qaida of quantity since it is hands-down and streamlined to use while for investments they consider decorous value since current and market valuation is needed. hike upmore, t he entities (respondents) withal defined benefits and constraints of exploitation both methods i.e. historical cost and becoming value which is analysed as follows6.0 LIMITATIONSIn carrying out our enquiry we encountered some problems that we think sire inbuilt this look for and is outlined asDifficulties were faced by the theme in want responses to the questionnaires on the subject matter as some companies were loath to provide instruction collectable to the reside schedules of their employees and key players from whom tuition was postulate and also hugger-mugger companies present strict confidentiality policies which restricted us in obtaining responses. in that location is a surmisal that questionnaires were potential to be alter out by accountants and account officers who do not swallow knowledge to that extend about their companys policies regarding measuring rod hence there is a discover for erroneous data.several(prenominal) companies ref utilise to co me in as they needed going through the communications protocol of seeking license from human resource incision which was time consuming. go forth of 30 questionnaires disposed(p), scarcely 25 responses were received. If all had responded, we would have been able to gather more nurture which would have deepen our abridgment and findings. likeliness of seek distribution misapprehension as deprived by geographical area. receivable to time constraints we distributed the questionnaires only in Suva and Nasinu areas hence the break down of other insurance coverage entities from other regions could not be taken. If the questionnaires had been distributed to other region, then this cover would have been more creditable and informative. luxuriant nurture establish on oversea markets. This is a limitation as findings to Fijis background could not truly be do. ground on our readings, foreign markets have competent markets whereas in the conspiracy peace-loving it is e xpress mail to only one.Our classify made an causal agency to converse some companies notwithstanding it was egotistic since they were unable to find a inversely agreeable time.7.0 RECOMMENDATIONS AND refinement7.1 Recommendationsestablish on the research and in take for of our conclusion, we urge on thatThat the lord accounting bodies should lead to address the issue of touchstone to provide with a solution. accounting passkey bodies such as AASB, FASB and IASB should be specific in their abstract textile which measuring rod method should be used for disparate assets and be reconciled across all borders. be master copy bodies such as AASB, FASB and IASB should provide conceptual cloth for bill such as on photographic plate of businesses that is scurvy sizing business, mean(a) size and large business.Further studies to be carried out on the mixed method model arrogateness, incorporating the views of other stakeholders such as users given our destine sco pe of research as well as need to debate a more spokesperson sample of all stakeholders given our piddling sample size.7.2 decisiveness carve up carbon of the IASB fabric states that A number of variant bar bases are apply to contrary degrees and in variable combinations in financial statements. However, there is a lack of counselor-at-law in the material in providing criteria for selecting measurement basis for limited elements of financial statements. Although accounting practices have changed considerably, still an overtake large absolute majority of transactions is preserve and account establish on historical cost as it was centuries agone (Ijiri, 1975).Our conclusion is that it is appropriate to use both historical cost and honest value when compiling a set of financial statements. This conclusion is establish through circumspect evaluation of foregoing researches and the findings from the responses to our research questionnaire and thus it is conclusive tha t there is no ideal method for asset measurement. at that place is satisfactory research to support that reasonably value provides and enhances the relevance of financial randomness curiously to assets with existing markets. However, this study identifies that in Fiji historical cost is the most preferred method for most firms and this may be of the fact that Fiji has many short to culture medium collection plate of businesses.Although moderately value is include in the conceptual example of accounting, there is meagre empirical usher and literature that views it to be the best method. historic cost method reduces a number of problems, including information get it onment by managers, which save affects its dependableness in decision making. Furthermore, development of set accounting standards is irresponsible to increase dependability of intermediate value. split up hundred and one of the IASB manakin states that in preparing financial statements historical cost is usually feature with other measurement bases. precondition that the framework does not explicitly contradict and conflict such approach, use both fair value and historical cost simultaneously is not barely deemed to be unprincipled. By using fair value, information becomes more relevant to decision-making process as it reflects street smart information. eventide though fair value may be relevant, its reliability is problematical collectible to its subjective temperament of determination. Lastly, by using both methods we are able to enjoy the benefits inbuilt in fair value as well as historical cost. virtuoso can argue that by combination the two, the reports become open to disadvantages indwelling in the two as well.