TRENDS

Investor Relations 2000

What's Fair?

 "Why Fair Value Accounting Can't Work," by Alfred M. King, Financial Executive, Jul/Aug 1999, pg. 54.

In dealing with operating assets, the nuts and bolts of a manufacturing business, what is fair value?  What do the proponents of fair value accounting want?

• Is it the cost to reproduce new the exact assets in place -- with or without accumulated depreciation from all causes?

• Is it the cost to replace the assets in place with the latest new technology, often at lower cost?

• Is it the cost to acquire the same or similar assets from a used-equipment dealer?

• Is it the price that would be received from a dealer if the assets were sold individually?

• Is it the price that would be realized at an industrial auction?

• Is it the price of the company would receive if the entire business unit were sold, perhaps including intangibles?

• Is it the original cost, adjusted by some price index?