APPLICATION OF THE FAIR VALUE METHOD IN LITHUANIAN LISTED COMPANIES

Authors

  • Kristina Rudžionienė
  • Remigija Lukošiūnaitė

DOI:

https://doi.org/10.15544/ssaf.2020.02

Abstract

The fair value approach, although causing a lot of controversy, is the only method of valuation for which a separate accounting standard is intended. When assessing some accounting items, it has been applied and in some cases companies are given the right to choose. The purpose of this article is to evaluate the application of the fair value method in listed companies of the Republic of Lithuania. The notes of financial statements of 17 listed companies investigated in 2008, 2013 and 2018. International accounting standards have been analysed, according to which listed companies keep accounting and measure assets and liabilities. It was determined which standards require the fair value is to be applied and which companies have the right to choose the historical cost or fair value. Financial leases, revenues, employee benefits, financial assets and liabilities, biological assets, assets and liabilities of the acquired company and investments in associates and joint ventures (at the time of financial reporting) must be measured exclusively at fair value. When IAS allows companies to choose a valuation method, generally Lithuanian quoted companies choose the historical cost method. This method was applied to all companies analysed for the accounting of intangible assets at all periods analysed. Fair value method is more popular for fixed tangible assets: 2008 it was estimated at 17,65 % companies and 23,53 % in 2018, but this method is increasingly applied to the valuation of investment property: in 2008, at fair value, the investment property was presented for 50 % and in 2018 14 % of the companies analysed.

Keywords: fair value, asset measurement, Lithuanian listed companies.

JEL codes: M41.

Published

2020-12-17

Issue

Section

Articles