Fair Value Essay Example | Topics and Well Written Essays - 1250 words

Fair Value - Essay ExampleThus, the AASB framework provides the general guidelines, establishing the way a company should stair all its assets. The aim of the act is to vitiate inconsistency of the various methods of measuring fair value, providing a more morose framework, for all companies. Thus, the market value of any current asset will be measured by the replacement cost of the services or benefits currently embodied in the asset.One very disputed and problematic point interested the market value of different assets that werent commonly traded on the open market, such as buildings or other possessions of this nature. The conclusion reached by the AASB researchers and specialists was that the best way to measure the market value of such assets would be by comparing the selling-prices of other buildings in the area. Although controversial at first, this rule was, seemingly, the best one to follow in establishing the potential selling price of any asset held by a company.The con cepts of current assets and current liabilities are also defined by AASB, as be an asset that is expected to mature or be realized within a 12 month period, while current liabilities are those liabilities that are expected to be paid, settled or extinguished within a period equal to or less than 12 months from the reporting date.FASB and IASB card members met on 12th of May, 2006 to discuss and establish the revenue light methods that should be used. In doing so, there were some factors that had to be acknowledged as important to the recognition of any revenue. First on the list was customer approveance, which lead, after thorough examination and in-depth discussions, to the conclusion thatRevenue shall be recognized if the customer must accept performance to date. That is, the contracts legal remedy for breach is, or is like, specific performance or in the event of customer cancellation, the customer is obligated to pay remediation reflecting performance to date. (see http//ww w.fasb.org/board_meeting_minutes/04-27-06_rr.pdf)Were hoping that there will be more consistency in the way companies approach fair value measurement, and less diversity in class period from the users perspective. Users should have more confidence that when they look at those disclosures about what is being shown at fair value and the methods used, theyll have better information to use to tax the quality of earnings and how they view the reliability of the estimates being made., stated FASB board member, Leslie F. Seidman (Glenn Cheney, FASB standard clarifies fair value measurement, 16 Oct, 2006,). From this point of view, the AASB framework provides rigorous guidelines, avoiding misunderstanding and inconsistency. Still, as all regulations were changed and revised, many companies complain that they have a difficult time in applying them, and that many criteria provided by this statement have been so frequently changed and discussed that the danger of misinterpreting or failing t o respect the newest changes is real and impossible to ignore.Given the fact that the market value is mainly based