Fair-Value Accounting. Fair-Value Accounting Analyzing the Changing Environment By Rebecca Toppe Shortridge, Amanda Schroeder, and Erin Wagoner APRIL 2006 - FASB’s exposure draft, Fair Value Measurement, has brought renewed attention to the debate between historical-cost measurement and fair-value measurement in financial statements.
Perhaps the strongest argument for a move to fair-value accounting is that historical-cost financial statements do not provide information that is relevant to investors. The fact that the market value of publicly traded firms on the New York Stock Exchange is five times their asset values serves to highlight this deficiency. The primary driver of this disparity was clearly illustrated by then–Federal Reserve Chairman Alan Greenspan, as quoted in Cracking the Value Code: How Successful Businesses Are Creating Wealth in the New Economy (Richard E.S. Accounting for investments in debt and equity securities. Concerns have been expressed by regulators and others about the recognition and measurement of investments in debt securities by financial institutions.
Such criticism intensified following the recent difficulties experienced by savings and loan institutions and banks. The criticisms specifically expressed were-- * the unacceptable diversity in practice in accounting for investments in debt securities; * fair value information about debt securities is more relevant than historical cost information; and. Derivatives Strategy - October'96: Getting Ready for the Big FASB Showdown. Getting Ready for the Big FASB Showdown Trekking to Stamford for the FASB Slugfest?
Take two Prozac and bring these articles along in your briefcase.