Committee on Accounting Valuation Bases.

Abstract The article highlights the report of the Committee on Accounting Valuation Bases of the American Accounting Association. The charge of this committee is to define the parameters and usefulness of valuation bases in accounting in light of existing theoretical studies, to identify a model by which these parameters could be applied to real-world situations, and to test the application of this model in one or more case studies. This report has four major sections. First section explores the concept of valuation, examine its various dimensions, and then propose a formal model of the valuation process. The question of alternative asset valuation bases raises a second issue not usually faced by the researcher. Financial statements should include plant and equipment at the amount of cash the firm would realize if they sold them through normal channels less any costs of sale, taxes and an allowance for interest where deferred payment is contemplated. While these forecasts are not part of the published financial statements, the existence of auditing procedures gives credence to the feasibility of such statements in the normal course of external financial reporting.