Fair value measurement
The FASB's framework for measuring fair value continues to challenge preparers, particularly with regards to the latest disclosure requirements from the 2011 amendment.
Latest developments
SEC chimes in: The SEC has weighed in on the new fair value measurement disclosures that became effective for most companies in the first quarter. Their key areas of focus have included: interrelationships between unobservable inputs; quantitative disclosure of unobservable inputs; and expanded disclosures about valuation techniques used for Level 2 inputs. For more information around these requirements, read Dataline 2012-20 below.
The 2011 amendment− subtle change, not-so-subtle impact?: The FASB's amendment changed the definition of "principal market." It is now defined as the market with the greatest volume and level of activity for the asset or liability, as long as the entity has access to that market. This represents a change from prior guidance, which had indicated that the principal market is the market in which the reporting entity transacts the greatest volume and level of activity for the asset or liability. While the consequence of this change may not be significant for many entities, fair values could differ, for example, for an entity that transacts in markets that many other entities cannot access. For more information on this change, read chapter 4 of PwC's Guide to Accounting for Fair Value Measurements.
What's next
Keep an eye on how public companies incorporate SEC disclosure feedback in their first annual filings under the new guidance. For nonpublic companies, the guidance is also about to become reality (effective for annual periods beginning after December 15, 2011).
Tax accounting insights
Tax considerations relating to fair value accounting
3/25/13 | Tax accounting services
Accounting guides
Guide to Accounting for Fair Value Measurements; Incorporating ASU 2011-04 - 2012 edition
4/25/12 | Assurance servicesIn brief
In brief: FASB proposes to defer quantitative disclosures for nonpublic employee benefit plans (No. 2013-23)5/2/13 | Assurance services
On April 30, 2013, the FASB issued a proposal that would indefinitely defer for nonpublic employee benefit plans certain quantitative fair value disclosures for investments in their plan sponsors' nonpublic entity equity securities. Comments on the FASB's exposure draft are due May 31, 2013. This In brief article provides an overview the FASB's proposal.
Tax accounting insights
Tax considerations relating to fair value accounting3/25/13 | Tax accounting services
PwC has refreshed our 'Fair Value Accounting: Tax Considerations' publication (originally released in December 2008).
Quarter close
The quarter close — First quarter 2013: Publication and new video perspectives3/18/13 | Assurance services
This edition of The quarter close highlights current developments in financial reporting, including key standard-setting developments in revenue, financial instruments, and other hot topics, as well as SEC and PCAOB regulatory updates.
Corporate Governance Series
Shareholder questions: considerations for 2013 annual meetings3/18/13 | Assurance services
This PwC publication is intended to help management and the board of directors of public companies prepare for the annual meeting of shareholders. It contains example questions on topics that may be top-of-mind for shareholders, along with background information and suggested actions for management’s consideration.
Quarter close
The quarter close — Fourth quarter 2012: Publication and new video perspectives12/12/12 | Assurance services
This edition of The quarter close has the latest updates and timely reminders to help you navigate your year-end reporting process with a number of hot topics, including fair value, asset impairments, pensions, valuation allowances, and more.
Dataline
Dataline: Financial instruments classification and measurement - An update on the FASB's tentative approach to be exposed in Q1 2013 (No. 2012-21)12/7/12 | Assurance services
Classification and measurement is an important part of the FASB and IASB’s joint project on financial instruments. The FASB expects to issue a revised exposure draft in the first quarter of 2013 for public comment. The board will likely ask for feedback on the amount of time needed to implement the changes before deciding on an effective date for the final standard. The IASB issued an exposure draft of its proposed changes to IFRS 9 in late November 2012 with a proposed effective date of January 1, 2015. The exposure draft has a 120-day comment period. This Dataline provides a summary of the boards' decisions that is based on the project summaries posted on their websites, our observations of their meetings, and our understanding of their intent.
Dataline
Dataline: 2012 year-end accounting and reporting considerations - Leading practices and lessons learned on key topics (No. 2012-20)12/3/12 | Assurance services
This year end, entities continue to face many complex financial reporting issues such as providing new fair value disclosures, accounting for debt modifications, and evaluating revenue recognition guidance. Economic challenges around the world continue to have broad financial reporting implications. While not an all-inclusive list, this Dataline is intended to serve as a timely reminder of leading practices and lessons learned on key issues that companies should consider as they navigate the year-end financial reporting process.
Dataline
Dataline: Highlights of the 2012 AICPA National Conference on Banks and Savings Institutions (No. 2012-14)10/18/12 | Assurance services
The 2012 AICPA National Conference on Banks and Savings Institutions was held September 10 through 12, 2012 in Washington, DC. Representatives from the banking regulators, SEC, and standard setters presented at the Conference along with auditors, users, preparers, and industry experts. Presenters expressed views on a wide range of important accounting, auditing, and financial reporting topics. This Dataline provides highlights of topics discussed at the Conference.
Quarter close
The quarter close — Third quarter 2012: Publication and new video perspectives now available9/17/12 | Assurance services
This edition of The quarter close highlights the SEC report on IFRS, the latest on conflict minerals, health care reform, and several FASB releases that are sure to keep you busy this fall. Video perspectives are also now available.
Dataline
Dataline: New fair value measurement standard -- Adoption of the new guidance: First quarter 2012 measurement and disclosure observations (No. 2012-05)6/14/12 | Assurance services
This PwC Dataline provides observations on how new fair value guidance was implemented in the first quarter by a sample of 37 companies from a variety of industries. It identifies leading practices and points of interest to assist reporting entities as they develop their future fair value disclosures. The companies we sampled are from a variety of industries, including (1) financial services - banking and capital markets, asset management, and insurance, and (2) other industries - utilities, energy, manufacturing, and real estate.
Accounting guides
Guide to Accounting for Fair Value Measurements; Incorporating ASU 2011-04 - 2012 edition4/25/12 | Assurance services
Fair value accounting continues to be a topic of significant interest and debate. With unprecedented market events, turmoil in the credit markets and a severe downturn in the global economy in recent years, discussion of fair value has intensified among the preparers and users of financial information. This discussion has made clear the need for consistent fair value measurements in a global market. PwC is pleased to offer the 2012 edition of this guide to help reporting entities meet the challenges of applying the key accounting and reporting standard related to fair value measurements, Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures (ASC 820).
EITF observer
EITF observer: A meeting synopsis - March 20123/18/12 | Assurance services
At the EITF's March 15 meeting, the EITF discussed six Issues, reaching a consensus-for-exposure on three Issues. The remaining three Issues will be discussed further at a future meeting.
Dataline
Dataline: New fair value measurement standard -- Implementation guidance for new disclosure requirements (No. 2012-02)2/27/12 | Assurance services
In May 2011, the FASB issued Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (the ASU). The ASU resulted from a joint project with the International Accounting Standards Board (IASB). The IASB also issued IFRS 13, Fair Value Measurement, in May 2011. Many of the changes to existing fair value measurement guidance represent clarifications and are intended to align U.S. GAAP and IFRS. However, certain of the amendments to U.S. GAAP are substantive and several new disclosures are required. This Dataline includes a series of questions and answers providing implementation guidance on selected new disclosure...
Dataline
Dataline: Accounting for derivative instruments -- Treasury and financial reporting implications of using an OIS (not LIBOR) curve in the valuation of certain derivatives (No. 2011-30)10/27/11 | Assurance services
Methodologies utilized to value derivative instruments continue to evolve, even for "plain vanilla" products. Some derivatives dealers have begun exploring valuing certain derivatives using an overnight index swap ("OIS") curve to discount the cash flows, rather than the LIBOR swap curve that has been used in the past. Derivatives to be valued using the OIS curve include collateralized derivatives and derivatives cleared through a central clearing house. This new method of valuation is the latest in a series of changes in recent years, which if implemented will result in changes for derivatives dealers across all aspects of their organizations and also for the counterparties to these trades. This Dataline addresses...
Dataline
Dataline: New fair value measurement standard -- Implementation guidance for key changes to the measurement of financial instruments at fair value (revised March 1, 2012*) (No. 2011-31)10/27/11 | Assurance services
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. Many of the changes to existing fair value measurement guidance represent clarifications and are intended to align U.S. GAAP and IFRS. However, certain of the amendments to U.S. GAAP are substantive and require analysis of current practice. This Dataline provides implementation guidance on certain aspects of the ASU, specifically regarding the fair value measurement of financial instruments, including (1) the application of premiums and discounts, (2) measuring the fair value of financial instruments with offsetting market and credit risks, and (3) the...
M&A snapshot
Market participants: how their views impact your values (M&A snapshot)9/26/11 | Assurance services
In a business combination, buyers are required to record the acquired assets and assumed liabilities of a business at their fair values. Fair value reflects the price that market participants would receive to sell an asset or pay to transfer a liability. Assets and liabilities may be used differently by different market participants, resulting in variations in values. Therefore, a market participant's view is an important aspect of the valuation process as a buyer cannot look only to its own intended use of an asset or its ability to transfer a liability at a certain price. This publication provides insight on the identification of market participants, as well as how entities can develop market participant assumptions.
Dataline
Dataline: Financial reporting considerations stemming from an uncertain global economy -- Accounting and reporting observations (No. 2011-27)9/15/11 | Assurance services
In recent months, capital markets and currency exchanges have experienced significant volatility. The downgrade of long-term U.S. Treasuries, the European debt crisis, and slowing gross domestic product (GDP) growth in the world's leading economies have contributed to an uncertain global economy. Companies should consider the impact of the changing economic environment on their accounting and financial reporting and monitor areas of their business that might be affected by an economic slowdown. This Dataline discusses the key areas of financial reporting that could be impacted by a broader economic slowdown.
Dataline
Dataline: Fair value measurement -- FASB and IASB complete joint project (No. 2011-23)6/9/11 | Assurance services
In May 2011, the FASB and IASB completed their joint project on fair value measurement and issued their respective final standards. The joint project was part of the Memorandum of Understanding between the FASB and IASB. The objective of the project was to bring together as closely as possible the fair value measurement and disclosure guidance issued by the two boards. The issuance of the final standards results in global fair value measurement and disclosure guidance and minimizes differences between U.S. GAAP and IFRS. This PwC Dataline describes the key changes to U.S. GAAP as well as other notable clarifying guidance included in the FASB's final standard. It also highlights key differences that will remain between U.S. GAAP and IFRS.
Dataline
Dataline: Fair value measurement -- FASB and IASB joint project near completion (No. 2011-12)2/24/11 | Assurance services
On June 29, 2010, both the FASB and IASB issued exposure drafts of proposed changes to their standards aimed at bringing together as closely as possible the fair value measurement and disclosure guidance of the two boards. The boards have been considering the feedback they received on the exposure drafts, and except for effective dates and transition, the boards have completed their redeliberations and plan to finalize their new standards in March 2011. Although many of the changes to existing U.S. GAAP will not have a significant effect on practice, some will. This Dataline summarizes key aspects of the FASB's exposure draft and decisions reached by the boards during redeliberations conducted subsequent to the issuance of their...
Dataline
Dataline: Highlights of the 2010 AICPA National Conference on Current SEC and PCAOB Developments (No. 2010-44)12/16/10 | Assurance services
Last week's annual AICPA National Conference on Current SEC and PCAOB Developments focused on restoring public trust and investor confidence in the U.S. capital markets. Presenters called for all members of the financial reporting supply chain, including boards, management and auditors, to play a role in these efforts. This Dataline takes a closer look at the topics discussed at the conference.
Dataline
Dataline: 2010 year-end accounting and reporting considerations (No. 2010-43)12/13/10 | Assurance services
This year end, companies continue to face many complex financial reporting issues such as asset impairments, debt modifications, revenue recognition and pensions. Recently issued legislation has created additional reporting considerations. Also, the SEC has put additional emphasis on compliance with certain existing disclosure requirements such as disclosures of loss contingencies, goodwill impairment, segments, and liquidity. Recently issued guidance by the FASB has become effective in 2010, including new guidance on consolidations, updates to fair value disclosures, and disclosures about the credit quality of finance receivables. While not intended to serve as an all-inclusive checklist, this Dataline should be helpful as a timely...
Dataline
Dataline: Highlights of November 2010 meeting of FASB's Valuation Resource Group (No. 2010-42)11/4/10 | Assurance services
At its November 2010 meeting, the FASB's Valuation Resource Group (VRG) discussed issues relating to: (1) fair value measurement of contingent consideration in a business combination, (2) application of the multi-period excess earnings method and the Greenfield method to value intangible assets, (3) consideration of premiums and discounts in fair value measurements, (4) a proposed Accounting Standards Update on determining the carrying amount of a reporting unit when performing step 1 of the goodwill impairment test, and (5) measurement uncertainty analysis disclosure. This Dataline summarizes the key points discussed by the FASB and VRG and shares the firm's insights.
PwC comment letter (FASB)
PwC Comments on Proposed ASU: Amendments for Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS9/9/10 | Assurance services
Although PwC generally agrees with proposals that would enhance consistency between U.S. GAAP and IFRS, the Firm believes the ED should be modified in certain areas described in detail in the letter and recommends that the FASB and the International Accounting Standards Board (IASB) work together to reconcile any substantive differences and work to achieve convergence in fair value measurement and disclosure guidance.
Dataline
Dataline: FASB and IASB Propose Changes to Fair Value Measurements and Disclosures (No. 2010-33)8/9/10 | Assurance services
This Dataline describes the key proposed changes in the FASB's exposure draft, Amendments for Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, as well as other notable clarifying guidance. The Dataline also includes PwC's observations about the potential impact of the proposal on practice and commentary about alignment with the IASB's exposure draft titled Measurement Uncertainty Analysis Disclosure for Fair Value Measurements (Limited re-exposure of proposed disclosure).