Fair Value Notes from AICPA

Fair Value Notes from AICPA -...

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AICPA Media Center — FAQs About Fair Value Accounting
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  Fair Value Basics Explained What is fair value accounting?  Fair value accounting, also called “mark-to-market,” is a way to  measure assets and liabilities that appear on a company’s balance sheet and income statement.  Measuring companies’ assets and liabilities at fair value may affect their income statement. SFAS  157 was issued in 2006 by the Financial Accounting Standards Board (FASB) effective for fiscal  year 2008. SFAS 157 defines in one place the meaning of “fair value.” Why is it important today?  Huge losses reported by financial firms on subprime assets have led  to a debate over the implementation of SFAS 157 in circumstances where markets collapse and  price inputs aren’t readily available.  In the current crisis, banks and investment banks have had to  reduce the value of the mortgages and mortgage-backed securities to reflect current prices.  
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