Writing Assignment.docx - I Introduction The Financial...

This preview shows page 1 - 3 out of 5 pages.

I. Introduction The Financial Accounting Standards Board (FASB) of the Financial Accounting Foundation (FAF) was created in 1973 as the private sector body given the primary responsibility to work out detailed guidelines companies follow in measuring and reporting financial information known as the Generally Accepted Accounting Principles (GAAP). In 2006, the Memorandum of Understanding was published to serve as the foundation to create a common set of quality global accounting standards set by the FASB and the International Accounting Standards Board (IASB). The Fair Value Measurements and Disclosures (FASB ASC 820 and IASB IFRS 13) is one of the many testaments of the Boards’ result in developing common requirements for measurements in accordance with US GAAP and International Financial Reporting Standards (IFRS) (2011). II. Fair Value Measurements The fair value standards define fair value measurement based on the price that would be received to sell an asset or transfer, not settle, a liability in an orderly transaction between market participants at the measurement date under current market conditions (Constantinou). Fair value requires to be measured market-based, rather than entity-specific, which means that exit price is at the measurement date from the perspective of a market participant that holds the asset or liability (2011). This Topic can be determined by using several key concepts: the unit of account, principal market, the highest and best use for nonfinancial assets, fair value hierarchy, and the valuation techniques (Constantinou). III. Unit of Account
Fair value measurement is only performed for a particular asset or liability for which characteristics include the condition or location and any restrictions on sale or use of the asset,

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture