For long-term investments, which accounting method provides superior information for decision making?

The reason market (fair) value accounting is recognized as the superior method for long-term investments lies in its ability to provide a more accurate and real-time representation of an asset's true value. This accounting method reflects the current market conditions, allowing stakeholders to see how much an investment is worth at any given moment based on prevailing prices.

This is particularly beneficial for long-term investments, where fluctuating market conditions can significantly impact asset valuation. By using market value accounting, decision-makers can evaluate the performance of their investments more effectively, making informed choices regarding buying, holding, or selling assets based on their current worth rather than historical costs.

In contrast, cash basis accounting records revenues and expenses when cash is actually received or paid, which may not adequately capture the value of an investment over time, especially for long-term holdings that might not generate immediate cash flow.

Accrual basis accounting recognizes revenues and expenses when they are incurred, but it still relies on estimations and does not provide the immediacy and relevance found in market value assessments. While this method improves upon cash basis accounting in reflecting financial performance, it does not fully embrace the current economic landscape as market value accounting does.

The assertion that all methods can be equally useful overlooks the fact that each