Historical Development Of Fair Value Measurement - 1400 Words

Fair value measurement is one of the models which provide guidance on how entities should determine the fair value of financial instruments for reporting purposes. This paper discusses the Financial Accounting Standards Board (FASB) Exposure Draft issued on December 3, 2015 which proposed amendments to Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements. The paper analyzes some of the key points of the exposure draft, among other things, the history and development the concept of fair value management, the necessity of the amendments to the topic, the provisions and conceptual framework of the fair value measurement. The paper also compares and contrasts the FASB Topic 820 formerly known as to the International Accounting Standards (ISA) No. 13 of the International Financial Reporting (IFRS). Finally, the paper concludes on the response to the exposure draft. Keywords: Fair value measurement, FASB Topic 820, IAS No. 13 Historical development of Fair Value Measurement Fair value measurement has been argued to be one of the most controversial areas in accounting. Although not a new concept many accounting professionals have only in the past two decades warmed up to the theory as a means of replacing the long standing historical cost approach applied to reporting of financial statement. This deviates from centuries of traditional application of historical cost. It is maintained in literature that fair value accountingShow MoreRelatedNew Zealand Financial Accounting. Essay1522 Words   |  7 Pagesframework for measuring fair value in IFRS. This is based on a number of key concepts including unit of account; exit price; valuation premise; highest and best use; principal market; market participant assumptions and the fair value hierarchy. Fair value is an important measurement on the basis of financial reporting. 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