Holistic approach to fair value estimation

Abstract

The goal of this paper is to carry out the comparative analysis of the accounting concept of fair value of assets in interconnection with the concepts of value in economics, finance theory, theory of real estate valuation as well as econometrics. The author ascertains that understanding of value differs between the fields of accounting, economics, finance, and real estate valuation. In addition, understanding of the factors, which influence value, differs among these domains. In all mentioned scientific fields, however, common goal is the forecast: “For what a price the asset can be sold at a certain time in a certain market?” In this paper, the author intends to elaborate a holistic approach to fair value concept and to offer more definite and flexible methods for fair value practical estimation. In the empirical part of this paper results of financial statements' research of 31 companies are presented. The methods of research are economic analysis and synthesis, as appropriate to the topic of study chosen.Empirical research leads to conclusions that management of reporting entities apply varied fair value estimation methods to a limited degree. The practice confirms the actual necessity for more holistic approach to the fair value concept and estimation methods.