Likewise, financial statements that are prepared in accordance with International Financial Reporting Standards are more understandable. The use of the fair market values in the presentation of accounting data would make the financial statements more understandable. The list of the fair market values found in the commodities market will help the derivatives investor understand that the prices of some commodities are volatile due to the erratic ups and downs in their fair market values. This is what is known as a bull market in the derivatives parlance.
The bull moves very quickly. Also, the list of fair market values of another derivative will show that its fair market value does not changing as rapidly as others. This is what is termed as the bear market in the derivatives market. The bear moves slowly. Whereas, not following the International Financial Reporting standards of using the current fair market values in the presentation of derivatives data would definitely not give the timely data needed help the derivatives investor to make timely decisions to invest more or withdraw his derivative investments.
Definitely, financial statements that are prepared in accordance with International Financial Reporting Standards are more reliable. The presentation of the financial information using the fair market values is more honest than a financial statement that is prepared using only estimates. The use of fair market values makes the financial accounting data more reliable because the bias of estimating the financial accounting data in terms of derivatives would be of lesser quality to the mind of the derivatives investor. People would better appreciate accounting data that is reliable.
And, this is especially true in the derivatives market that includes gold, petroleum and the other derivatives. The use of present as well as the past fair market values would give the derivatives investor a more entire picture of the derivative that he or she is interested to invest in. The use of fair market values makes the accounting data more reliable because fair market values are definitely free from bias. The fair market value is reliable because they are neutral since fair market value is the equilibrium price as agreed by the buyer and the seller of a derivative.
Likewise, the fair market value makes the financial accounting data more reliable because the use of historical as well as the current fair market values makes the accounting information more complete. Whereas, violating the International Financial Reporting standards by not using the fair market values would surely give the derivatives investor a less than complete picture of what is currently happening to the derivative in terms of fair market values and trend analysis.
Lastly, preparing the financial statements in accordance with International Financial Reporting Standards is a plus in terms of financial reporting equity. The use of fair market values in the preparation of accounting data would definitely be a plus to the financial accounting data. For, the derivatives investor must know the fair market values in order to determine how much he or she will state as his offer price in the commodities sell market. Likewise, the use of the fair market value is a plus to the derivatives buyer.
The derivatives buyer will use the fair market values and the history of fair market values of the derivative listed in the commodities market to determine the bid price that he or she will willing to pay for an investment in the French money -Franc. The plus characteristic of using the fair market value to comply with International Financial Reporting standards is also due to the reason that the derivatives investor is always set on alert mode with a list of the past as well as the latest blow by blow presentation of fair market values of the derivative that he is has already put his hard earned money.
The financial accounting data that uses the fair market values is a definite plus to the persons or company presenting such financial data because fair market values are neutral amounts and not based on the estimates or biases of the person or company responsible for the presentation of such financial data. Likewise, the use of the fair market values in the preparation of financial data is a big plus because it satisfies the accounting theory of substance over form.
Substance over form can be defined also as recording only what is important and not whether the financial statements are presented in short form, in long form, in beautifully engrossed reports, in high quality printing paper, or otherwise but rather what the financial statements will do in terms of helping the investors in the derivatives market as well as investors in other types of business to make better decisions. This is one of the countless reasons why the financial accounting data using the fair market as well as the list of the prior market values is a very big plus.