Accounting Boards Issue Converged Fair-Value Standards - FASB and the IASB meld their ways on a key accounting rule.

Article source: CFO.com
By David M. Katz, May 12, 2011

Key Points:

1. FASB and IASB come together on the fair-value measurement and disclosure requirements.
2. SFAS 157:  3 Levels in the "fair value hierarchy" for measuring assets and liabilities.

    Disclosures rquirements for 3 Levels:
    a. Level 1 - valued without any adjustments to the quoted prices in the active markets in which they trade.
    b. Level 2 - valuation is based on "observable market data" other than a quoted market price.
    c. Level 3 - valued by means of "unobservable inputs." Entity's own data can be included to adjust  to reflect market participants' assumptions.


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