Fair value measurement

Fair value accounting continues to be a topic of significant interest and debate. Fair value guidance is a principles-based global framework that, with few exceptions, impacts all fair value measurements in a reporting entity’s financial statements.

  • The FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) in May 2015. This standard eliminates the requirement to include investments from the fair value hierarchy table whose fair values are measured at net asset value (NAV) using the practical expedient. It is important to note that for some investments, NAV is fair value, not a practical expedient. In those cases, the investments must still be included in the fair value table.

  • The new guidance is effective for fiscal years beginning after December 15, 2015 for public business entities. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted.

  • Reporting entities must apply the new guidance retrospectively to all periods presented. Additionally, a reporting entity should disclose the nature of and reason for the change in accounting.

  • Removing investments measured using the practical expedient from the fair value hierarchy is intended to eliminate the diversity in practice that currently exists with respect to the categorization of these investments. Following the implementation of this guidance, the only criterion for categorizing investments in the fair value hierarchy will be the observability of the inputs.

  • Because a reporting entity’s investments measured at NAV as a practical expedient for fair value will no longer be categorized in the fair value hierarchy, the total of the fair value hierarchy disclosure will not agree to the total investments at fair value on the balance sheet. Therefore, the new guidance requires reporting entities to reconcile the fair value hierarchy disclosure to the balance sheet by disclosing the amount of investments measured using the practical expedient.

  • Although the underlying investments have been removed from the fair value hierarchy, the new guidance still requires reporting entities that elect the practical expedient to make certain disclosures about the nature and risks of the investments. However, the previous standard required companies to include certain disclosures for items that were eligible to use the NAV whether or not NAV was elected. The amendments remove these disclosure requirements.

In depth: Assessing whether an equity investment has a readily determinable fair value

05/02/16

The amended definition of readily determinable fair value may impact accounting and disclosure for equity securities. Read more

In brief: FASB proposes to simplify measurement of goodwill impairment

05/12/16

FASB proposed eliminating Step 2 of the current goodwill impairment test.

In depth: Assessing whether an equity investment has a readily determinable fair value

05/02/16

The amended definition of readily determinable fair value may impact accounting and disclosure for equity securities.

In brief: IVSC issues exposure drafts on revised intangibles standard and other topics

04/28/16

IVSC is seeking feedback on proposed revisions to intangible assets valuation standard and other topics.

Upstream Valuations in the Current Commodity Price Environment

04/05/16

The last year has been challenging for the oil & gas E&P industry. PwC’s leaders analyze the current market environment’s impact on upstream valuations.

PwC comments on the FASB’s proposed amendments to the fair value disclosures

02/29/16

PwC does not believe the proposal improves fair value disclosure effectiveness.

In brief: Classification and measurement – FASB issues final standard

01/07/16

FASB issues classification and measurement standard, which will significantly impact accounting for equity investments.

In brief: Fair value disclosures - FASB proposes enhancements

12/07/15

PwC describes the FASB proposal to improve fair value disclosures. Proposed changes would affect all industries.

In brief: Classification and measurement of financial instruments effective date set

11/18/15

The FASB has decided upon the effective dates for the Financial Instruments: Classification and Measurement standard.

Fair value measurements - 2015 global edition

08/10/15

PwC's popular global guide to fair value measurements helps entites apply U.S. GAAP and IFRS related to fair value, ASC 820, and IFRS 13.

Financial statement presentation guide - 2014 second edition (July 2015)

07/22/15

PwC's popular Financial statement presentation guide addresses U.S. GAAP presentation and disclosure requirements of common balance sheet and income statement accounts.