Companies routinely utilize interest rate swaps to reduce their exposure to changes in the fair value
of assets and liabilities or cash flows due to fluctuations in interest rates.
Sarah is involved with CliftonLarsonAllen's in-house training program by providing training on the topics of investments, fair value
measurements, split-interest agreements, contributions, and net assets.
From an IFRS perspective, IFRS 13 provides significant fair value
guidance as, for the first time there is a precise definition of fair value
and a single source of fair value
measurement and disclosure requirements (U.S.
The critical debate on usefulness of fair value
accounting has arisen in connection with the financial crunch and economic crisis in years 2007-2009.
Under this proposal, most financial instruments would be measured at fair value
on the balance sheet.
It requires you to measure a biological asset at fair value
less cost to sell, other than when its fair value
cannot be measured reliably.
Elements of fair value
accounting have been used for decades in U.S.
The increased importance of the concept of "fair value
", as well as the ever higher importance of financial assets, have created the framework for developing a new value-based accounting model.
FASB has raised the bar for disclosure required when the fair value
option is in play so that investors, analysts and other financial statement users will be able to clearly understand the extent to which the option is used and how changes in fair values
are reflected in the financial statements.
Another area of discussion has been around how to calculate fair values
and what the appropriate categorization is of the fair values
calculated as level 1, 2 or 3 under the newly issued guidance.
FASB's fair value
measurement standard is a good first step toward developing enhanced guidance for the estimation of fair values
Archival research on the value- and risk-relevance of fair values
provides only mixed support for these normative predictions.