Question: Long response questions: In recent speeches the Chairman of the IASB (Hoogervorst, 2015a and 2015b) refers to the 2015 exposure draft on the conceptual framework (IFRS Foundation, 2015a), and in particular the issue of measurement. He suggests that there are two broad categories of measurement, namely historical cost and current value.
Required: With reference to the above documents, discuss the different types of measurement and the factors to consider when selecting a measurement basis.
It has been claimed that Fair Value Accounting (FVA) (see for example Deegan, 2014, p197) exacerbated the Global Financial Crisis (GFC). Banks in particular argued that mark-to-market accounting in a declining market made the financial crisis worse than it otherwise would have been.
Required: With reference to FCAG (2009) and Pozen (2009, online at: Post-Crisis Reform and Fair Value Accounting) and any other relevant sources, outline the grounds for this argument and the IASB's response to the claim.