FASB Issues Proposal on Fair Value Measurements | AccountingWEB

FASB Issues Proposal on Fair Value Measurements

In response to requests from constituents to improve the current guidance for measuring fair value, the Financial Accounting Standards Board (FASB) has published an Exposure Draft, Fair Value Measurements.

The Exposure Draft seeks to establish a framework for measuring fair value that would apply broadly to financial and nonfinancial assets and liabilities, improving the consistency, comparability, and reliability of the measurements. The fair value framework would clarify the fair value measurement objective and its application under other authoritative pronouncements that require fair value measurements. Thus, the Exposure Draft would replace any current guidance for measuring fair value in those pronouncements.

Since the Board added the project to its agenda one year ago, the staff and members of the Board have consulted with valuation experts and other interested parties. "An important aspect of this project is to provide guidance for measuring fair value that can be generally understood and consistently applied by preparers, auditors, and valuation professionals," said Linda A. McDonald, FASB Project Manager.

The Exposure Draft also would expand current disclosures about the use of fair value to measure assets and liabilities. The disclosures focus on the methods used for the measurements and would apply whether the assets and liabilities are measured at fair value in all periods such as trading securities or in only some periods such as impaired assets.

FASB member Leslie F. Seidman, Board collaborator for the project, said, "I think this proposed standard will clarify the approach that should be used in estimating fair value. The proposed disclosures should help investors evaluate the extent of fair value being used presently in the financial statements and the effect on earnings.

The comment period for the Exposure Draft ends September 7, 2004. The Board plans to hold a public roundtable meeting in September 2004 to gather additional input. The document is available on the FASB's website at www.fasb.org.

Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked

Editor's Choice

WHAT KIND OF FIRM ARE YOU?
As part of our continued effort to provide valuable resources and insight to our subscribers, we're conducting this brief survey to learn more about your personal experiences in the accounting profession. We will be giving away five $50 Amazon gift cards, and a $250 Amazon gift card to one lucky participant.
This is strictly for internal use and data will not be sold
or shared with any third parties.