Fasb Essay

1559 WordsMar 8, 20157 Pages
Week 1 Assignment Week 1 Assignment Financial Accounting Standards Board Assignment Financial Accounting Standards Board Assignment Accounting Standards Update No.2009-05 (August 2009): The Accounting Standards Update No.2009-05 is in regards Fair Value Measurements and Disclosures of Liabilities in the financial statements. This update has been issued because the valuation of companies could have materially varied with the valuation of their liabilities with different methods on the balance sheet. Equity accounts could possibly be understated/overstated depending on the valuation of liabilities. This update allows the valuation method of liabilities for companies to be more symmetric. Valuation techniques are established in this standard update that have to be used. The first updated valuation technique is having the liabilities stated at the quoted price in an actively trading market, which is called a Level 1 measurement according to the standard’s update. If an active price for a liability is not available on the open market new valuation techniques are established such as: valuing a liability at a current quoted price of an identical liability, valuing a liability at a current quoted price of a similar liability when traded as an asset. An income approach valuation of a liability is consistent with the original standard. The original standard would measure the value of the liability based on the amount the entity would pay to transfer the liability or receive a comparable liability within the competitors. A new update to this standard states that an entity cannot include a separate input or adjustment to other inputs relating to the existence of a restrictions that prevents the transfer of the liability. This actually references fees that an entity may encounter when transferring liabilities between participants since there might be additional

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