What is certain, however, is that there will be more evolution of what we consider to be
fair value in the months and years to come, particularly if the goal is ultimately to provide more transparency to users of the financial statements while hopefully making it easier for the preparers to implement and less costly to continuously account for.
Therefore, although real property might have been valued at
fair value in the course of, for instance, a SFAS 141 business combination (in other words, as part of initial recognition), it would not subsequently be revalued for the balance sheet over time.
ASC Topic 820 also makes it clear that a
fair value measurement does not include transaction costs.
The validity of exposing a business to a market (evaluating at
fair value doesn't mean that we determine the value according to market prices and performances based on variations of
fair value), is not a bad idea, but considering the existence of a liquid market and a process that measures a credible and fair
fair value then users are given real guaranties regarding the real value of the business.
- Modifications and Additions to FASB's
Fair Value Measurement Disclosure Requirements
The financial crisis of 2008-2009 has generated a fierce debate about
fair value accounting.
Amendments that dairy how to apply the existing
fair value measurement and disclosure provisions in Topic 820.
* effects of fluctuations in
fair value on the profit and loss account;
Accounting guidance establishes a
fair value hierarchy, a summary for which follows.
Land or buildings held to earn rental income, held for capital appreciation or both (referred to as "Real Estate" or "Investment Property") would qualify for
fair value accounting if the new rules are approved by FASB.
It strongly disagreed with the proposed additional
fair value disclosures, particularly requirements to disclose effects from changing unobservable inputs; when use of an asset differs from the highest and best use when that asset is at
fair value on the balance sheet; and categorization by
fair value hierarchy level for items that are not measured at
fair value but for which
fair values are disclosed elsewhere.
Elements of
fair value accounting have been used for decades in U.S.
