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I need some assistance with these assignment. fair value measurement Thank you in advance for the help!
I need some assistance with these assignment. fair value measurement Thank you in advance for the help! If the fair value thus evaluated falls short of the cost incurred / book value of the asset, the difference is treated as impairment and is written off to profit and loss. The problem of fair value measurement occurs when an active market for the concerned asset or liability is not available on a reporting date. The entities may adopt varied ways to find out the fair value depending upon the nature of asset or liability involved, as no regulated procedure was available earlier under any GAAP before the pronouncement of SFAS 157 by FASB.
IASB requires the use of the fair value of assets and liabilities under different standards but the issue of fair value measurement has not been standardized so far. In order to provide consistency in the measurement of fair value and also for providing a boost to convergence efforts between IASB and FASB, particularly after the appearance of SFAS 157, the IASB published a discussion paper seeking opinions from different sources in order to establish some sort of regulations for the measurement of fair value. It may be noted that recently issued SFAS 157 Fair Value Measurements has provided some guidance to IASB for further maneuvering on the subject matter. That is why in its pursuit to establish a unified code for measuring fair value for different assets and liabilities ISAB as per a press release (30 November 2006)2has made the decision of using a single definition of fair value established by SFAS 157 Fair Value Measurements as the starting point of deliberation.
SFAS 157 acknowledges that fair value is the exchange price of assets and liabilities in orderly transactions between buyers and sellers in the most advantageous market for such assets or liabilities. It also assumes a hypothetical transaction of sale and purchase in an orderly market to establish the fair value of asset or liability.
