Historical cost and fair value are not as far apart as they may seem

Hans Hoogervorst, Chairman of the International Accounting Standards Board (IASB), has today delivered a speech on what he calls one of the most difficult topics in accounting—how assets and liabilities should be measured. Speaking at the IFRS Foundation’s conference in Paris, he presented high-level, general observations on when historical cost and current value measurement could be most appropriate.

When measuring an asset or a liability, different measurement models are available: historical cost and current value, which includes fair value. They are often seen to be at opposite ends of the measurement spectrum, and both have their own ‘fan clubs’ with strong views on which is the better model.

Hoogervorst outlined the benefits and challenges linked to the measurement models and said the differences between them are not as great as they may seem.

Read the full press release here.


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