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Fair Value Measurements Project

Monday, December 15, 2008

The FASB has concluded that fair value information is relevant and they believe users of financial statements generally have agreed. Others, however, have expressed concerns about the ability to apply the fair value measurement objective in GAAP, more recently, in response to the FASB Proposal, "Principles - Based Approach to U.S. Standard Setting". An exposure draft for a proposed statement was issued during June 2004. A comment letter was issued by the FRC on behalf of IMA addressing issues raised in the exposure draft. The comment letter was issued on September 21, 2004. The FASB issued Statement No. 157 – “Fair Value Measurements” during September 2006. The statement is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Early adoption is permitted. A copy of the statement can be found on FASB’s website at Once on the home page, proceed to click on Pronouncements & EITF abstracts on the left hand side of the page. Look for the reference of FASB Standard No. 157. The Financial Reporting Committee of IMA submitted a letter to the FASB for the board to consider a one year delay in implementation of FAS 157.

The FASB has decided to proceed with the exposure of a proposed FASB Staff Position (FSP), “Fair Value Measurements in Business Combinations and Impairment Tests”. The proposed FSP would amend Statements 141, 142 and 144 to clarify the existing guidance in those Statements regarding fair value measurements. The proposed FSP would be effective until the reporting entity adopts FASB Statement No. 157, “Fair Value Measurements”. The proposed FSP would not require application of the guidance in Statement 157 prior to a reporting entity’s adoption of that Statement. A copy of the proposed FSP can be found below.

During December 2007, the FASB issued two Staff Position (FSPs) related to FASB Statement No. 157, FSP FAS 157 – A, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Its Related Interpretive Accounting Pronouncements That Address Leasing Transactions”, and FSP FAS 157 – B, “Deferral of Effective Date”. The FSP related to the deferral of an effective date proposes a one year deferral of the effective date of FASB Statement No. 157 for nonfinancial assets and liabilities. A copy of the proposed FSPs can be found on the FASB’s website at under Pronouncements and EITF Abstracts. The Financial Reporting Committee of IMA submitted a letter to the FASB to address their views about the FSPs.

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