The article focuses on accounting systems disclosing income information. Income measurement entails reporting in each time period: present-period cash flows; and an accrual measure based on these cash flows and the change in the expected present values of future cash flows. Information disclosure is ensured if one can always identify which of the possible events in a given event structure has occurred in each time period. D. Vickrey introduces the concept of "weak transparency," referring to the special case of a null information structure. Under the null information structure, there is a constant mapping from underlying states of nature to the set of reported events (or the possible messages to be conveyed). There is essentially no information to be conveyed by income measurement when the information structure is null, so the invertibility condition is satisfied trivially. The main implication of the "possibility result" is that the ability of an accounting system to convey information is not constrained by a requirement that it value assets or measure income.

Discusses a link between two conflicting approaches to accounting theory. Proper income measurement or asset evaluation; Information disclosure; Corporate income measurement in the two approaches; Divergence of accounting value and economic value.

We examine the design of asset revaluation policies in settings where a regulator can mandate fair value disclosure in order to mitigate a lemons problem in the asset resale market. The welfare-maximizing policy generally prescribes fair value certification for the lower asset values and (less costly) historical cost reporting for the higher asset values. The potential for voluntary certification can reduce welfare by increasing equilibrium certification costs and promoting underinvestment in socially valuable projects. Thus, a single regulated source of information (mandated disclosure) can be preferable to two sources of information (mandated and voluntary disclosure).