Abstract:
In recent years, the leading standard setters for financial reporting have shown an increasing
preference for fair value measurement. However, present value is often the only acceptable
method of estimating fair value and therefore the actual result of the swing to fair value is
likely to be increased use of present value in financial reporting. This paper addresses the
issue of interpretation of a change in present value between successive reporting dates and
shows that the change can be analyzed by use of the familiar variance analysis framework
widely used in management accounting.
