Fair Value for ALL Financial Instruments, but Own Debt at Amortized Cost

Following up on Lisa’s post, I see that the FASB has summarized the key conclusions of this week’s Board meeting: The Board agreed to propose a model to improve financial reporting for financial instruments.   The Board reached the following decisions: Read more > >

FASB to Develop a Disclosure Framework

The FASB announced today the addition of a disclosure framework project to their agenda.  The addition of the project appears to be motivated by feedback the Board received the ITAC and CIFR committees. In today’s press release, Chairman Bob Herz said: Read more > >

Does Accounting Have Real Effects?

We often hear the argument that accounting policy shouldn’t matter since it doesn’t change the underlying economics of a transaction or event.  Preparers, however, often act as if the accounting does matter (think pensions, stock option expensing, other comprehensive income, just to name a few).  Here’s another example… Read more > >

Research Ideas: FAS 5 Contingencies

Today during Office Hours, we had David Elsbree, Project Manager on the FASB’s project regarding disclosures for litigation-related loss contingencies.  During that discussion, two issues seemed to be at the heart of the debate over how the FASB should proceed with this project:  (1) Would  the required provision of potentially (upward) biased measures of contingent losses (as [...] Read more > >

The conceptual framework is bigger than you think

Today’s session pertained to the Conceptual Framework Project. Ray Pfeiffer led the discussion. Ron Bossio, Senior Project Manager from the FASB and Kevin McBeth, Project Manager also from the FASB spoke to us about the progress on the conceptual framework project. Although we covered a lot of bases (including the infamous fair value topic), I [...] Read more > >

The Last Authoritative SFAS?

The FASB has recently issued an exposure draft of a standard that would replace the current GAAP hierarchy (as dictated by SFAS  162).  The new hierarchy would simply consist of two levels: Read more > >

Leslie Seidman: In the “Cautionary Camp” on Fair Value

A few weeks ago FASB Board member Leslie Seidman joined us for office hours.  We covered a lot of ground, and Ray has already written on some of her ideas for research.  I thought I would summarize her rather cautionary views on fair value accounting for financial instruments.  Playing to the academic audience, Ms. Seidman [...] Read more > >

New Guidance on Other-Than-Temporary Impairments

The FASB just released a Proposed FASB Staff Position that would amend the other-than-temporary (OTT) impairment guidance in two FASB Statements (SFAS 115 and SFAS 124) and in EITF 99-20.  This Proposed FSP seems to make two big changes.  Read more > >

FSP FAS 157-e Proposes 2-Step Test for Determining Whether a Market is Not Active

A new FASB Staff Position proposes a 2-step test to determine whether a market is not active. This will hardly satisfy those who think firms shouldn’t have to use fair value accounting for the assets in question in the first place.  But for those who are simply complaining that market prices are ‘fire sale’ prices, [...] Read more > >