Abstract: The International Accounting Standards Board and other financial statement users are often in conflict on which is a better financial reporting method, the fair value or the historical cost. This research is conducted by evaluation studies by agencies such as the United States Securities and Exchange Commissions on the use of fair value of entities. The findings indicated the usefulness of historical cost but global industrialization calls for the use of a uniform reporting standard among countries. The fair market value as discussed in IAS 39 has risks associated on its' misapplication. Despite this, more financial statement users favour the fair market value in financial reporting.