The IASB reaffirms its belief that fair value measurement guidance under IFRSs and US GAAP is already consistent. Also, IASB and FASB intend to issue common guidance on any accounting questions arising from the US Emergency Economic Stabilization Act.
The IASB provided an update on its work to consider the application of fair value when markets become inactive. The IASB reaffirms its belief that fair value measurement guidance under IFRSs and US GAAP is already consistent.
The IASB and the FASB will continue to co-operate to ensure that applying fair value in inactive markets is dealt with consistently. They also intend to issue common guidance on any accounting questions arising from the US Emergency Economic Stabilization Act of 2008.
The IASB Expert Advisory Panel agreed on 10 October to emphasise that the objective of a fair value measurement is the price at which an orderly transaction would take place between market participants on the measurement date, not the price that would be achieved in a forced liquidation or distress sale. The Panel reaffirmed that such transactions should not be considered in a fair value measurement, whilst also noting that even in times of market dislocation not all market activity arises from forced liquidations or distress sales.
The Panel also agreed to emphasise existing guidance within IFRSs that using the entity’s own assumptions about future cash flows and appropriately risk-adjusted discount rates is acceptable when relevant observable inputs are not available.
Press release
© IASB - International Accounting Standards Board
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