Fair Value Measurements
IFRS 7 and Topic 820 (FAS 157)
An overview of the financial accounting standards for fair value measurements are outlined below for companies that follow International or U.S. accounting standards. For a more complete and detailed description of each standard, it is recommended to visit the respective issuer’s website.
| IFRS 7 | Topic 820 (Replacement of FAS 157) |
|
|---|---|---|
| Title | Financial Instruments | Fair Value Measurements |
| Issuer | International Accounting Standards Board (IASB) | Financial Accounting Standards Board (FASB) |
| Region | International | USA |
| Effective | TBD | November 1, 2007 |
| 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. IFRS 7 provides a hierarchy to be used in determining the fair value for a financial instrument. Some of the changes to Fair Value Measurements in IFRS 7 standard include new guidelines surrounding impairment assessment and strategic equity investment. | Topic 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures. Topic 820 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. |
| How FINCAD can help | With its industry standard analytics and integrated market data, FINCAD solutions can provide the fair value measurements of derivatives classified as Level 2 or 3 under IFRS 7 and Topic 820. Applicable FINCAD solutions: Request a free trial of one of the above solutions. |
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*"In Canada, for fiscal years commencing in 2011 and thereafter, Canadian GAAP for publicly accountable enterprises (PAEs) will convert to IFRSs. The Canadian Accounting Standards Board and the Public Sector Accounting Board will continue to issue and maintain separate accounting standards for private enterprises, not-for-profit organizations, and public sector organizations." –Source: The IFRS Changeover, A Guide for Users of Financial Reports, A Canadian Performance Reporting Board Publication. For more information, visit www.cica.ca.
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.