http://ww2.cfo.com/management-accounting/2014/09/is-fair-value-accounting-foul/

Financial accountants seek to provide meaningful financial information to external users of financial statements. Meaningful financial information must be both relevant and objective and these two qualities are not necessarily compatible. Traditionally, financial statements have been prepared with assets and liabilities recorded at historical costs and some have argued that while objective, historical costs are not meaningful or relevant to decision making. In recent years there has been a movement to improve this relevancy by requiring companies to estimate the fair market value of their assets and liabilities. However, certain experts in the field argue that fair market values do not result in increased relevance.

In the article “Is Fair Value Foul?” Stanford Graduate School of Business professor Charles Lee is cited as arguing against the move towards fair value reporting. Professor Lee suggests that “as soon as we start to anticipate future exchanges, we are in a world of speculation”. He states that the less investors use a company’s fair value to measure the worth of a company the better because such information is subjective and speculative. Lee contends that the financial statements are best prepared with historical costs because the information is objective and verifiable. This is the kind of accounting information that provides a solid basis for preparing relevant forecasts of the future value of a company.