The impact on historical cost, full disclosure, objectivity, and other accounting beliefs, which have been accessed through accounting practices over periods of time.
This is a fantastic question because fair value changes financial statement reporting so much. The level 3 inputs are where the action is. The aspect of fair value has changed the skill set for auditors. Auditors should understand financial valuation. I can go on forever with this. I have a paper forthcoming in the Journal of Applied Accounting Research:"The Expectation Differences Among Stakeholders in the Financial Valuation Fitness of Auditors." See abstract attached.
IMPACT ON THEORY: With new rules introduced, if the new rules does not agree with existing theory---the theory would have to be revised as being outdated since the new rule reflects the current condition of the market. More pressing is the impact of the new rule on current practice. The current call for the new rule by IFRS 9 is in response to the recent financial crisis.
IMPACT ON PRACTICE: Mortgages, investment in debt instruments (long-term) will mostly be affected by the requirement of fair value reporting. In the mortgage industry and banking sector what should be classified as amortized cost or FVOCI is not a straight forward task because the bank may hold the debt for the entire life or may sell the debt where there are changes in the market---as the result the business model is more dynamic than the rule assumes. Many organizations in debt instrument sectors will have to re-think about its business models and loss models.
NEW ACCOUNTING STANDARDS: The introduction of the IFRS9 is tantamount to introducing new accounting standard since it would result in a new rule for recognition of risk/potential loss----in many cases, the business (especially in banking industry) will have to re-adjust business model or redefine terms in their business models in order to comply with IFRS9---what will happen to prior reports? How will investment decision made in accordance with prior reports and with the new information under new report (are they consistent)? What will be the impact in the investment market? More questions are raised than answered in the market.
http://www.iasplus.com/en/standards/ifrs/ifrs9
Significantly still Aurelius Augustine (353-430) wrote about the fair market price as the only real measure of value. So the theory is not new, but rather old and unregistered until now benefits. Well, now will have a lot of conservative accountants and auditors to sweat over textbooks in financial mathematics, but such is life!