FASB and IASB Make Decisions About Transition Method and Effective Dates for Pending Fair Value Measurement and Disclosure Guidance

Published on: 15 Mar 2011

At their joint meeting today, the FASB and the IASB made a number of tentative decisions about the effective dates and transition for fair value measurement and disclosure guidance expected to be issued in the second quarter of 2011.

FASB Accounting Standards Update

In June 2010, the FASB issued a proposed Accounting Standards Update (ASU), Amendments for Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which amends ASC 820.1 Today, the FASB tentatively decided to make the measurement and disclosure requirements of the proposed ASU effective for:

  • Public entities for interim and annual periods beginning on or after December 15, 2011 (i.e., for the first quarter ended March 31, 2012).
  • Nonpublic entities for annual periods ending on or after December 15, 2012.

Nonpublic entities would be permitted to early adopt the guidance for interim periods beginning on or after December 15, 2011 (i.e., as early as the effective date for public entities). The FASB also tentatively decided that for both public and nonpublic entities, the amendments to ASC 820 would be applied prospectively (i.e., no cumulative adjustment to opening retained earnings) as of the beginning of the period in which the guidance is initially applied and that revisions resulting from a change in valuation technique or its application should be accounted for as a change in accounting estimate.

The FASB staff currently anticipates issuing a final ASU in April 2011. However, certain FASB Board members expressed support for delaying the issuance to May 2011. No decision was made about the final issuance date.

IASB Exposure Draft

Also today, the IASB tentatively decided that the effective date of an IFRS on fair value measurement should be January 1, 2013, and that earlier application will be permitted, though an entity applying the IFRS for an earlier period would disclose that fact.

A transition method was not discussed during today’s meeting because the IASB received very few comments on the proposed transition requirements, and the comments received were supportive of the proposal, which requires that the draft IFRS be applied prospectively as of the beginning of the annual period in which it is initially applied.


[1] FASB Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures.

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