Uncertainty in Asset Values Could Impact Financial Reporting Standards
The article discusses how to determine the fair value of operational assets, like machinery or equipment, by considering their best use and potential sales price. By combining the most valuable operating and sales values, weighted by their likelihood, the fair value can be calculated. When there is uncertainty about these values, the fair value increases due to the need for accurate reporting. More precise information reduces uncertainty and brings the fair value closer to the highest potential value of the asset.