Statement of Financial Accounting Standards ( SFAS ) No. 157 defines what is just value as understood in footings of by and large accepted accounting rules ( GAAP ) . and it besides increases revelation demand about just value measurings. This latest Statement. effectual this 2007 is being made applicable to other accounting dictums made earlier where there is a demand or allowance for usage just value measurings of an accounting entities’ assets. liabilities and equity histories. ( Bernstein. 1993 ; Brigham and Houston. 2002 ) .
SFAS 157 therefore does non necessitate any new just value measurings on the footing of the Financial Accounting Standards Board holding earlier determined that that just value is the relevant measuring property ( FASB. n. d. ) . As to why the FASB needed to publish this SFAS. it may be recalled that before this Statement. the Accounting profession has already been exposed to different definitions of just value but merely had limited counsel for using those definitions in GAAP ( Meigs and Meigs. 1995 ) .
This is non to advert the fact that that counsel to comptrollers was found in many accounting dictums that require just value measurings. thereby bring forthing differences that strong plenty to make possible incompatibilities of these guidelines hence may be held contrary into the FASB aim of using GAA lupus erythematosus complex. Increased consistence and comparison in just value measurings and for expanded revelations about just value measurings appears to be the clear aim of FASB in ordaining this SFAS 157 ( FASB. n. d. ) .
As to how this differs from other just value dictums. the argued may be framed on the undermentioned points: First. since the alterations to current pattern ensuing from the application of this Statement relate to the definition of just value. the methods used to mensurate just value. and the expanded revelations about just value measurings. the differences should merely be expected to originate on said points.
Specifically. the present definition of just value under SFAS 157 preserves the exchange monetary value impression in earlier definitions of just value. SFAS 157 nevertheless now makes the elucidation that “the exchange monetary value is the monetary value in an orderly dealing between market participants to sell the plus or reassign the liability in the market in which the coverage entity would transact for the plus or liability. that is. the principal or most advantageous market for the plus or liability. ” ( FASB. 2007. n. d. ) .
The new statement treats the dealing to sell the plus or reassign the liability as a conjectural dealing at the measuring day of the month. considered from the position of a market participant that holds the plus or owes the liability. It is hence clear to see focal point of the definition made on the monetary value that would be received to sell the plus or paid to reassign the liability ( FASB. 2007. n. d. ) . Such definition of monetary value is of class different and should be distinguished on the monetary value that would be paid to get the plus or received to presume the liability.
It needs to be emphasized besides that SFAS treats just value as a market-based measuring. non an entity-specific measuring. hence measuring is determined based on the premises that market participants would utilize in pricing the plus or liability ( FASB. 2007. n. d. ) . 3. Choose one public company in the last 3 old ages that has had plus damages and have a one page account of what the damage was about and under what standard it was calculated. The company is selected is Standard Register.
Using its 2006 Annual Report. the company ( Standard Register 2007b ) has so plus impairment Net Assets Held for Sale based on its notes to FS which provides: “In concurrence with the shutting of the Terre Haute works. in 2006 the Company recorded $ 1. 474 of plus damages. chiefly related to equipment.
The transporting value of the Terre Haute edifice and equipment was adjusted to its just value less costs to sell. sing recent gross revenues of similar belongingss and existent estate valuations” This paper submits that the damage may hold been calculated under SFAS No. 154. made effectual on January 2. 2006. on Accounting Changes and Error Corrections which is a replacing of APB Opinion No. 20 and Financial Accounting Standards Board ( FASB ) Statement No. 3. ( Standard Register 2007a ) 4. Submit the rubric page of SFAS 157 from the FASB or FARS site. See Following Page. 5. Submit a transcript of the page of the company 10-K that indicates the damage Bernstein. Financial Statement Analysis. IRWIN. Sydney. Australia. ( 1993 ) Brigham and Houston. Fundamentalss of Financial Management. Thomson South-Western. US. 2002
FASB. Summary of Statement No. 157 Fair Value Measurements. ( n. d. ) hypertext transfer protocol: //www. fasb. org/st/summary/stsum157. shtml. { www papers } URL. Accessed October 7. 2007 Meigs and Meigs. Financial Accounting. McGraw-Hill. New York. USA. 1995 Standard Register. 2006 Annual Report. Form 10 – K. ( 2007a ) { www papers } URL hypertext transfer protocol: //media. corporate-ir. net/media_files/irol/95/95849/2006annualreport2. pdf. Accessed October 7. 2007 Standard Register. Company Website. ( 2007b ) { www papers } URL. hypertext transfer protocol: //www. standardregister. com/ . Accessed October 7. 2007
