Abstract:

The principles of recognition and measurement of the financial statements positions are contained in the accounting standards. Although there are various sets of financial reporting standards, in all of them it is possible to recognize the same or very similar rules of measurement and valuation of assets. The cost model usually comes with the possibility of applying the fair value model. It is to be expected that asset valuation at a fair value model requires additional administrative and financial burden for smaller enterprises since they often lack staffing or financial capacity to apply it. The purpose of this study is to explore whether there is a real practical need for applying a fair value model to the practice of financial reporting by small Croatian enterprises. Since long-term asset is represented in almost all manufacturing enterprises, the focus will be placed on analysis of the existing situation as well as the perspective of applying fair value in the area of valuation of long-term asset, precisely this significant group of small business enterprises engaged in manufacturing activities.