FASB No. 157, Fair value accounting
Not what you're looking for?
After reading an article about the controversy of companies using fair value accounting, the new auditor, Kelle, comes to you with questions. You decide to provide the new hires with some information on fair value accounting.
Send them a memo defining and discussing fair value accounting. This memo needs to include the following:
Explain what the FASB Statement No. 157 is and why it came about.
Explain whether you think Statement No. 157 properly addressed the fair value issue and why or why not.
Describe at least 2 different valuation methods.
Explain which valuation method you believe is the best (fair value is an option), and support your answer with rationale and cited evidence.
Purchase this Solution
Solution Summary
FASB No. 157, Fair value accounting is discussed very comprehensively in this explanation..
Solution Preview
Accounting Issues Impacting the Business Environment
After reading an article about the controversy of companies using fair value accounting, the new auditor, Kelle, comes to you with questions. You decide to provide the new hires with some information on fair value accounting.
Send them a memo defining and discussing fair value accounting. This memo needs to include the following:
Explain what the FASB Statement No. 157 is and why it came about.
FASB Statement No. 157 is an accounting standards developed by the Financial Standards Board which became effective for firm with fiscal years after 15 November 2007. The FASB Statement No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
FASB Statement No. 157 clarifies what is fair value, it sets up a hierarchy used to classify the source of information used in fair value measurements, Made mandatory that changes in credit risk should be included in the valuation, changed the rule hat a measurement date-specific transaction price is same as measurement date-specific fair value. FASB Statement No. 157 has increased the disclosure obligations for assets and liabilities measured at fair value. The FASB Statement No. 157 applies only when accounting rules makes it mandatory or allows fair value measurement for an asset or liability (1).
Explain ...
Education
- BSc , University of Calcutta
- MBA, Eastern Institute for Integrated Learning in Management
Recent Feedback
- "I read your comments, and thank you for this feedback. Do I need to find other studies that applied this methodology Ive used? That's where I'm stuck at."
- "Thank you kindly sir. "
- "Excellent and well explained. --Thank you kindly. "
- "Awesome notes. I appreciate you."
- "I have the follow-up project and I will assign that to you very soon. "
Purchase this Solution
Free BrainMass Quizzes
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Lean your Process
This quiz will help you understand the basic concepts of Lean.