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    IFRS fair value measurement and accounting policy choice in the United Kingdom and Australia

    Access Status
    Fulltext not available
    Authors
    Cairns, D.
    Massoudi, D.
    Taplin, Ross
    Tarca, A.
    Date
    2011
    Type
    Journal Article
    
    Metadata
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    Citation
    Cairns, David and Massoudi, Dianne and Taplin, Ross and Tarca, Ann. 2011. IFRS fair value measurement and accounting policy choice in the United Kingdom and Australia. The British Accounting Review. 43 (1): pp. 1-21.
    Source Title
    The British Accounting Review
    DOI
    10.1016/j.bar.2010.10.003
    ISSN
    0890-8389
    School
    School of Accounting
    URI
    http://hdl.handle.net/20.500.11937/29925
    Collection
    • Curtin Research Publications
    Abstract

    This study investigates the use of fair value measurement by 228 listed companies in the UK and Australia around the time of adoption of IFRS from 1 January 2005. We test whether within and between country comparability in policy choices (as measured by T indices) has changed in relation to (a) mandatory and (b) optional use of fair value measurement. Mandatory requirements related to financial instruments (IAS 39) and share-based payments (IFRS 2) have increased comparability, with a weaker effect for biological assets (IAS 41). In relation to the optional use of fair value, comparability increased in relation to property (IAS 16) because some companies discontinued fair value measurement. Under IAS 39, the fair value option for other financial assets and other financial liabilities decreased comparability. Options to use fair value in other areas (intangible assets, plant and equipment and investment properties) are not generally taken up, either for on-going measurement or on IFRS adoption (under the ‘deemed cost’ option). The results suggest a conservative approach and/or lack of incentives to use fair value measurement for most companies. Exceptions include some banks and insurance companies (for other financial assets and liabilities) and companies holding investment properties.

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