Fair Value for Accountants
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Fair value in recent years has been both the basis for many new accounting pronouncements of the FASB, as well as the focus of regulators such as the SEC and PCAOB. Commonly used as the measurement basis for a wide range of assets and liabilities, the difficulty in estimating fair value ranges from straight-forward to extremely complex and full of judgment.
This one-day seminar is designed to provide financial executives, managers and others responsible for accounting and reporting an in-depth understanding of the requirements of ASC Topic 820, Fair Value Measurement, as well as the key assumptions and methodologies used to estimate, fair value. Through the use of class exercises and illustrative examples, the fundamental principles of fair value as well as typical practice issues as highlighted by regulators, are not only presented, but discussed to ensure fair value principles can be applied by the accountants charged with the responsibility of financial reporting.
Although the course is updated throughout the year as developments occur, topics are expected to include:
Introduction to fair value measurement
- Scope of ASC Topic 820
- Areas in US GAAP where fair value measurement is utilized
- Recent emphasis on fair value measurements, views on fair value measurement as basis for accounting
- Definition of fair value under ASC Topic 820
Typical valuation methodologies
- Market, income and costs approaches
- Common valuation methods used for different types of assets/liabilities
Fair value of financial assets
- Fair value for equity securities, debt securities, derivative financial instruments, other alternative investments
- Various issues, including blockage discounts, restricted securities, bid-ask spread, transaction costs, consideration of credit risk/liquidity risk and other factors, etc.
Using NAV as a practical expedient to fair value
- Fair value for alternative investments
- FV vs. NAV, qualifying for practical expedient, practice issues
Fair value of nonfinancial assets
- Highest and best use of a nonfinancial asset, valuation approaches, key assumptions used to determine fair value, etc.
Fair value of liabilities
- Valuation approaches to determine fair value of liabilities, consideration of non-performance risk, recognizing changes in fair value due to credit risk for liabilities
Financial statement presentation
- Measuring fair value on a "net basis" of assets/liabilities
- Fair value hierarchy
- Other disclosure requirements
- Example financial statement disclosures