Deloitte Alert on proposed FASB FSP on FV measurement

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02 Oct 2008

Deloitte (United States) has published an Alert on a proposed FASB Staff Position (FSP) that would amend FASB Statement 157 Fair Value Measurements to provide guidance on measuring fair values (FV) in illiquid markets.

Deloitte Financial Reporting Alert 08-12 (PDF 34k) points out that the FSP will not change the measurement principles in FAS 157 but will provide guidance for applying those principles in inactive markets by elaborating on the guidance that the SEC and FASB Issued Jointly on 30 September 2008 (see our Earlier News Story). Examples will be added to FAS 157 on:
  • How entities' internal (entity-specific) assumptions should be considered in the measurement of FV for a financial asset when relevant market data does not exist.
  • How observable market information in an inactive market affects FV measurements.
  • How entities should consider the use of broker quotes or pricing services when assessing the relevance of inputs available to measure FV.
FASB will expose the proposed FSP for comment by the end of this week, with comments due by 9 October 2008. FASB plans to finalise the FSP on 10 October 2008, with an immediate effective date (including for financial statements for periods ending 30 September 2008 that have not yet been issued). Regarding transition, any changes in fair value would be included in an entity's financial results; retrospective application of the guidance to prior periods would be prohibited.


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