Articles & Reports

Understanding the Issues—Measuring Fair Value

The FASB recognizes its responsibility to maintain a continuing dialogue with constituents, especially when it introduces new ideas. To judge by the comment letters, many have interpreted Concepts Statement 7 as far more complex and difficult than the Board intended. Others may not have understood (or may not have accepted) the rationale behind the Board's conclusions. With that in mind, the Board and staff have prepared a series of articles to communicate both its rationale and its expectations for applications of Concepts Statement 7.

This is the third in a series of articles that explore the application of Concepts Statement 7. Previous articles discussed (1) the use of an expected-cash-flow approach to measurements and (2) the conceptual rationale behind the use of fair value as a measurement objective. In this article, we turn our attention to the problems of estimating fair value and provide some guidance on using cash flows in the estimation process.

Measuring Fair Value
June 2001–Volume 3, Series 1
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