The Incidence of The Fair Value of Real Estate in The Usefulness of Financial Statements: a Research Note

• Published in: Revista de contabilidad Vol. 12; no. 1; pp. 141 - 162
• Main Authors: Galera, Andrés Navarro, López, María del Carmen Peréz
• Format: Journal Article
• Language: English
• Published: ASEPUC (Asociación Española de Profesores Universitarios de Contabilidad) 2009
• Series: Revista de Contabilidad - Spanish Accounting Review
• Subjects: conceptual framework; Fair Value; IFRS; usefulness of financial information
• ISSN: 1138-4891

The option in the recent Spanish regulation for fair value over historical cost, as the preferred measurement basis for some assets, has raised some controversy. This paper studies the effects on accounting information relevance and reliability of fair value accounting for investment properties. The empirical study is based on a questionnairebased survey of the perceptions of 151 Spanish accountants in the building industry about the usefulness and reliability of fair value accounting. The analysis of results allows us concluding that accountants perceive that the usefulness of financial statements increases when investment property is valued on a fair value basis, compared with a historical cost basis. However, respondents conceive fair value accounting as less objective and verifiable. We have also observed that firm size may influence the opinion of the impact of fair value on the relevance and reliability of financial statements.