The International Accounting Standards Board
(IASB) and US Financial Accounting Standards Board (FASB) have
proposed final changes to their fair value measurement rules ahead
of a converged standard that is due for release early next
The IASB has proposed further enhancements to
a disclosure proposal on Level 3 fair value measurements that
formed part of its fair value measurement exposure draft published
in May 2009.
In the 2009 draft, the IASB proposed a
three-level fair value hierarchy that categorises observable and
non-observable market data used as inputs for fair value
According to that hierarchy, Level 3 inputs
are ‘unobservable inputs’ that are used for the fair value
measurement of assets or liabilities for which market data are not
The new IASB proposals require the measurement
uncertainty analysis disclosure to reflect the interdependencies
between unobservable inputs used to measure fair value in Level
The FASB exposure draft, Amendments for Common
Fair Value Measurement and Disclosure Requirements in US GAAP and
IFRSs, introduces amendments to US GAAP the boards believe would
enhance the comparability of fair value measurement in US GAAP and
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Both boards will consider the comments
received on the exposure drafts jointly.
Getting to the same
The objective of the fair value measurement
project is to develop a converged definition and common
This is necessary to achieving full
convergence of any standards that require fair value
The new standard will not dictate when fair
value should be used.
Both exposure drafts are open for comment
until 7 September 2010.