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.
Many of the changes in the U.S. final standard represent clarifications to existing guidance. Some changes, however, such as the change in the valuation premise and the application of premiums and discounts, and new required disclosures, could have a significant impact on practice. This 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.
The U.S. guidance is effective for interim and annual periods beginning after December 15, 2011. For nonpublic companies that apply U.S GAAP, the standard is effective for annual periods beginning after December 15, 2011. The IASB’s standard will first be effective for annual periods beginning on or after January 1, 2013. Subsequent to the first year of adoption, the measurement principles and certain disclosures will be applicable in interim and annual periods.