International Accounting

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Fair value in the Russian accounting practice: The rationale and possibility of measurement

Vol. 22, Iss. 7, JULY 2019

Received: 23 April 2019

Received in revised form: 21 May 2019

Accepted: 13 June 2019

Available online: 15 July 2019


JEL Classification: М40, М41

Pages: 766–778

Sorokina E.M. Baikal State University, Irkutsk, Russian Federation

Makarenko S.A. Baikal State University, Irkutsk, Russian Federation

ORCID id: not available

Subject As the current accounting practices in Russia show, accounting items (lease items, in particular) can be measured at fair value, which still lacks a theoretical underpinning. There is no unambiguous and common understanding of this concept and measurement technique.
Objectives The study reviews the concept of fair value and practical possibilities to calculate it.
Methods We examine, systematize, summarize and analyze the relevant economic literature and regulatory framework.
Results Accounting data become more informative if accounting items are measured at fair value. We also prove it is unreasonable to cease using the actual value for valuation purposes since it preserves the controlling function. The existing technological level of the accounting practice is sufficient to provide users with information on accounting items measured at two types of values (historical cost and fair value). It is not always reasonable, if impossible, to translate the fair value through the market value. In the case of the sluggish or non-existent market, fair value should be calculated as the present value. However, in the case of discounting, it is difficult to determine the acceptable discount rate.
Conclusions and Relevance The findings can help formulate theoretical aspects to guide the measurement at fair value, refine regulatory documents and prevent clerical errors in measuring the fair value of lease items.

Keywords: fair value, market value, discounted value, present value, valuation of assets and liability


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