'Fair values good, historical costs bad' (after Orwell; Animal Farm) Essay

Fair values good, historical costs bad (after Orwell Animal Farm). Discuss - Essay ExampleHave the bean-counters tired of amount? What in the balance sheets name is happening?The simple reason for the young mantra is that the accounting profession has decided on a new set of standards for the valuation of assets. Perhaps never before in accounting history has an issue generated such controversy as the debate between comme il faut value and historical cost, which is reaching mythic proportions as a battle between good and evil.The accounting profession is one of the pillars of capitalism, a great wile of the modern era because it allows for transparency, fairness, and trust in the conduct of business (Johnson, 1975). Without accounting standards, it would have been impossible for the world of business to have gone as far as it has, simply because we would not have many of the aspects of business that we now take for granted. Valuation of corporate shares, borrowing and lending of funds, capitalisation of assets, and even price of products and services would have been problematic, as it was in the early days of business when the words caveat emptor (Buyer Beware) was the norm. In addition, it is easier to calculate profit and damage and to price risk because accountants have agreed on generally accepted accounting practice.Investors are better informed, owners of corporations nates sleep better at night, and millions of workers can get instant feedback on their collective performance thanks to the accounting standards that help establish share prices, cash flows, and liquidity, giving each stakeholder a clearer get word of its position.Accounting reports have come a long way in the last hundred years as to report the true position of a companys accounts, but as recent events have made clear, notably the scandals associated with formerly high-flying companies Enron and WorldCom in the U.S., accounting standards need to be continuously and carefully defined