Fair Value Measurement The Ongoing Trend Toward Using Fair Value Has Both Its

question 48

Essay

Fair value measurement
The ongoing trend toward using fair value has both its supporters and its critics. Briefly explain arguments in favour of and against the use of fair value.

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Definitions:

Bad Debt Expense

Bad debt expense represents the loss that a company incurs when it is unable to collect receivables from customers who are unable to pay their debts.

Adjusting Entry

Refers to adjustments made in the books of accounts to record expenses or revenues that have occurred but are not accurately represented in financial statements.

Write Off

The act of removing an asset from the financial statements due to its impairment or irrelevance, recognizing it as a loss.

Estimated Bad Debts

An account on the financial statements estimating the amount of receivables that a company does not expect to collect.