ACCOUNTING VALUATION
7. CONCLUDING REMARKS
In the 1960s the concept of measurement was introduced to accounting with high hopes. Many even expected a revolution (Bierman, 1963, p. 501). Although the term revolution was never elaborated, it may have referred to the predictive value of information following the example of the natural sciences. In hindsight one may say that the revolution never en sued in any such sense.
The main reason for this disappointment may have been that it was the modern view of measure-ment that was adopted, not the classical one. The modern view amounted to hardly more than a shift in terminology: the term “valuation” was replaced by the term “meas urement”.
The motivation for this paper came from the observation that the IASB has moved in the di-rection of the classical measurement theory, although not explicitly redefining meas ure ment. IFRS 13 Fair Value Measurement is the most significant example of this because it puts such a great emphasis on making observations, which is precisely the emphasis that classical measurement theory makes too. In line with this the aim of the paper was to elaborate on the key concepts of the classical measurement theory, to explain the implications of this the ory for the concept of an asset, and finally to propose a new measurement-based classification of assets for financial reporting.
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Measure ment was defined as the effective assignment of num bers to numerically quanti fied properties of the object or event using the empirical opera tion of ob servation. The main implica-tion of this definiimplica-tion was that the value of assets cannot be measured unless the con cept of an asset is modified. The cur rent defini tions make the value of all as sets depend on the future, thus ex clud ing the possi bility of direct ob servation. This problem can be avoided ei ther by introducing the basic resource as a unique asset having instrumental value or by re formu lating the defi nition of an as set. For example, the definition in IASB Up date (2006b, p. 4) could be reformulated as follows: ‘An asset is a present economic resource [em bodying actual or poten tial eco nomic ben-efits] to which an entity has a present right or other privi leged access.’
Assuming that one does not want to reduce the amount of information currently released in fi nan cial reports, they will continue to consist of information that is based only in part on classi-cal measurement. The other part will be based on forecasting and allocation. The ra tion ale for distinguishing measurements from forecasts and allocations is that forecasts are typi cally more uncer tain and allocations are definitely more discretionary than measurements. There fore the new five-category classification of assets may help in assessing the riskiness of various asset groups and the riskiness of the firm. Consequently it may also help in making risk/return assessments.
Whether this really is the case or not requires further research in terms of em pirical testing.
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