FASB proposes fair value guidance in inactive markets
03 Oct 2008
The US Financial Accounting Standards Board has invited comment on a proposed FASB Staff Position (FSP) that addresses concerns regarding the determination of fair value in markets that are not active.
The objective of the guidance in proposed FSP FAS 157-d is to clarify how SFAS 157 applies to determining the fair value of assets and liabilities in inactive markets and to provide an example that illustrates several key principles, including the following:
There is more information in the Handout for Observers at the FASB Meeting (PDF 46k) beginning on page 7. The proposed FSP is now posted on FASB's Website. The planned one-week comment period will end on 9 October 2008, and the FASB expects to meet on 10 October 2008 to discuss comments received and vote on final guidance. The guidance would be effective on issuance. Any resulting changes in fair value measurements would be reflected in current profit or loss rather than by restating prior period financial statements.
FAS 157 principles that will be illustrated in the guidance:
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