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The Role of Accounting and the Debate between Historical Cost and Fair Value

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  • Tang Vicki Wei

    (Associate Professor of Accounting, McDonough School of Business, Georgetown University, Washington, DC 20057-0004, USA)

Abstract

This article argues that the debate between historical cost basis and fair value basis of accounting also rests upon one central question: what kinds of output do users want out of the accounting system: metrics to measure the long-run profit-generating ability or metrics to capture the short-run fluctuation in the estimated values of net assets?

Suggested Citation

  • Tang Vicki Wei, 2019. "The Role of Accounting and the Debate between Historical Cost and Fair Value," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 9(1), pages 1-3, March.
    • Handle: RePEc:bpj:aelcon:v:9:y:2019:i:1:p:3:n:4
    DOI: 10.1515/ael-2016-0066
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    References listed on IDEAS

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    5. Schwarz Claudia & Karakitsos Polychronis & Merriman Niall & Studener Werner, 2015. "Why Accounting Matters: A Central Bank Perspective," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 5(1), pages 1-42, March.
    6. Biondi Yuri, 2011. "The Pure Logic of Accounting: A Critique of the Fair Value Revolution," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 1(1), pages 1-49, January.
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    Keywords

    fair value approach; historical cost;

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