January 2010

Accounting Boards Define Fair Value

From webcpa.com.

The Financial Accounting Standards Board and the International Accounting Standards Board tentatively decided to define fair value as an exit price during a three-day joint meeting this week.

Fair value measurement is one of the thornier issues the two standards-setters are trying to come to an agreement on as they seek to converge U.S. GAAP with International Financial Reporting Standards by June 2011. Fair value, or mark-to-market, accounting has been blamed in some quarters for helping exacerbate the financial crisis. Standard-setters have come under pressure to revise the standards to give financial institutions more flexibility in valuing assets such as mortgage-backed securities that became difficult to trade during the crisis. The two boards have decided to meet on a monthly basis, both in person and by video conference, to resolve outstanding issues in areas such as fair value, revenue recognition, leases and consolidation.

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