Fair-Value Accounting Method Law and Legal Definition

Fair-value accounting method is a method adopted for the evaluation of assets at present, actual, or market value. Proponents of fair value accounting consider that fair value is the most pertinent measure for financial reporting. This method is commonly used in the business of short-term trading for profit, such as the trading account for banks. It helps regulators depositors and investors to achieve greater regulatory and market discipline. It further helps the investors and taxpayers to avoid certain loses that they have had to pay during former downtrends in the economy.