Fair Value & Option to Report Fin Assets & Liab @ Fair Value
Recognize various items @ fair value:
Exceptions that are not qualify for FV:
Qualify for the Fair Value election:
3 valuation techniques: MIC
Market Approach - Market transactions
Income Approach - Revenue, cost savings, earnings, etc.
Cost Approach - replacement cost
3 levels of inputs for valuation:
Level 1 - most reliable (observable data from actual market)
Level 2 - observable but not identical assets/liab
Level 3 - unobservable data
Disclosures - consistency & comparability in FV measurement
Using Cash Flow info & PV in accounting measurements:
Revenue & Expense Recognition:
Accrual Accounting - revenues are recognized when earned and expenses when incurred (not received or paid)
Revenues or Gains are recognized when:
Revenue Recognition:
Sales = buyer has a right of return (reasonably estimable or with expiration date)
Recognize Expenses or Losses as Incurred:
Risks & Uncertainties:
4 areas of disclosure:
FASB Accounting Std Codification: Stmts on Fin Accounting Concepts (SFAC)
Emerging Issues Task Force (EITF) - account for new & unusual financial transactions
Summary of significant accounting policies (notes in F/S).
Summary of significant assumptions - for prospective F/S
Other notes to F/S