157 provides a common definition of fair value
to be used in applying previously issued FASB pronouncements.
Having said that, however, there is not a switch that will be flipped that suddenly allows or requires fair value
in all FASB standards relating to assets and liabilities.
The valuation industry's response has been to first estimate the fair value
of the financial instrument, assuming it is marketable, and then to adjust this value by a discount for lack of marketability (DLOM).
Designed to improve the effectiveness of disclosure requirements for fair value
measurements, the proposed ASU is part of the FASB's disclosure framework project that aims to make disclosures in the notes to financial statements more effective by clearly communicating the information that's most important to financial statement users.
The transition to fair value
from historical cost it represents a choice with major implications in accounting, thus being a difficult process that must be redefined according to current national and global economic tendencies.
Sarah is involved with CliftonLarsonAllen's in-house training program by providing training on the topics of investments, fair value
measurements, split-interest agreements, contributions, and net assets.
The fair value
of a financial asset is determined based on real or potential market transactions in the government's principal market (or in the absence of a principal market, a government's most advantageous market).
This methodology identifies the importance of shocks to fair value
and shocks to risk premium in explaining exchange rate fluctuations over different periods, as well as over various horizons of interest.
FAS 115-2 and FAS 124-2 which gives flexibility to companies in determining fair value
of assets and liabilities when the market is inactive and also allows banks to keep certain losses out of earnings.
A fair-value hedge addresses the risk that the fair value
of an asset or liability could change.
From an IFRS perspective, IFRS 13 provides significant fair value
guidance as, for the first time there is a precise definition of fair value
and a single source of fair value
measurement and disclosure requirements (U.S.