Using Of Fair Value In Different Sectors

In Fiji, most companies listed under South Pacific Stock Exchange use fair value as one of their measurement in measuring changes of assets and liabilities. Mostly fair value is a common measurement used by companies and is the only measurement (default measurement) under IFRS. Looking at different companies under different sectors the usage and benefits may slightly different in some ways but most applies to all companies.

For companies like Future Forest Fiji since they are in agricultural sector, using of fair value in this industry may be less because they value biological assets mostly in historical cost rather than fair value method. In this case according to FFF 2017 financial annual report, fair value is used when only it is specifically stated but mostly historical cost is used under the basis of preparation. In agricultural sector the use of fair value might be unreliable however it is relevant in terms of measuring assets and liabilities. Thus fair value not only provide relevant information but also help in making good decision and also it is considered to be better basis for estimating results for business entities or companies. Using fair value on assets and liabilities during evaluation will shows economic revenue at which economic price are taken into account. In equity Investment Company they encounter certain benefits in some point where entities who listed some of their items under historical cost need to reveal its fair value amount for which users of financial statement will enable to make such decision mostly in gaining profits over losses. Moving on the accounting information base on fair value will help entities for making comparisons among related business that apply fair value, with this companies will try to compare its financial statement and find out what assets they have together. For example, Kinetic Growth Fund and the leading equity investment company Fijian Holding Limited can compare their assets against each other.

On the other hand trading of shares on their own will increase the cost of investment within the company through the use of fair value accounting. Looking at manufacturing company the use of fair value enable to reflect the information currently available on the financial statement. However hidden assets and liabilities will rise due to obsolete historical cost information for which in some companies like FMF (manufacturing company) assets are understated due to current market price of the companies holdings is not disclose in the financial statement. Thus fair value also provides shareholders a deliberately look for upcoming analytical value of the business and this advantageous to all the three sectors discussed above.