FAIR VALUE ACCOUNTING under FAS 157 and IFRS 13: EVIDENCE from BOR

Abstract

Among the traditional models to value financial
instruments, mixed model is generally employed. Mixed
model uses both fair value and historical cost calculations
where the instruments held for trading are valued at
market price; and the rest are recorded at their historical
cost. In contrast to this model, fair value method suggests that
the financial instruments are recorded at their market
value. Aim of this paper is to review the widespread
application of fair value in accounting under FAS 157 and
IFRS 13 with regard to its application to financial
instruments; and to compare historical cost accounting with
fair value accounting by providing evidence from Borsa
Istanbul (formerly known as Istanbul Stock Exchange).