Fair Value Measurements
An overview of the financial accounting standards for fair value measurements are outlined below for companies that follow International, US, or Canadian accounting standards. For a more complete and detailed description of each standard, it is recommended to visit the respective issuer’s website. IAS 39 and CICA 3855 also appear in the Derivatives and Hedging section.
IAS 39 |
FAS 157 |
CICA 3855 |
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| Title | Financial Instruments: Recognition and Measurement | Fair Value Measurements | Financial Instruments – Recognition and Measurement |
| Issuer | International Accounting Standards Board (IASB) | Financial Accounting Standards Board (FASB) | Canadian Institute of Chartered Accountants (CICA) |
| Region | International | USA | Canada |
| Effective | January 1, 2001 | November 1, 2007 | October 1, 2006 |
| Overview | Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction. IAS 39 provides a hierarchy to be used in determining the fair value for a financial instrument:
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FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures. FAS 157 emphasizes that fair value is a market-based measurement, establishing a fair value hierarchy for measurement: Level 1: Quoted market prices in active markets. Level 2: Prices other than quoted prices (valuation technique with observable market data). Level 3: Unobservable inputs using estimates and assumptions. |
CICA section 3855 defines fair value as the amount of the consideration that would be agreed upon in an arm’s length transaction between knowledgeable, willing parties who are under no compulsion to act. Section 3855 effectively harmonized Canadian GAAP with IFRS with respect to the recognition and measurement of financial assets and financial liabilities, therefore, Canadian companies reporting under CICA standards should refer to the hierarchy in IAS 39 for measuring the fair value of a derivative. |
| How FINCAD can help | With its industry standard analytics and integrated market data, FINCAD solutions can provide the fair value measurements of derivatives for the 2nd level in IAS 39, FAS 157 and CICA 3855, and to a lesser extent, the 3rd level. Applicable FINCAD solutions:
Click here to request a trial of one of the above solutions. |
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We hope that such information will assist you, but it should not be used or relied upon as a substitute for your own independent research. For a more comprehensive view of the standards/requirements, please visit the respective issuer's website.
