Final answer:
Fair Value Accounting is a good solution for the trade-off between earnings management costs and the benefits of judgment, as it provides transparency and accuracy in financial reporting.
Step-by-step explanation:
Fair Value Accounting is a method of measuring and reporting the value of assets and liabilities based on their current market prices. It is considered a good solution for the trade-off between the costs of earnings management and the benefits of allowing judgment.
The use of fair value accounting provides more transparency and accuracy in financial reporting, as it reflects the current market conditions and the true economic value of assets and liabilities.
For example, if a company owns an investment property, fair value accounting would require the company to report the property at its current market value, which can be more reliable and relevant than historical cost accounting.