In a fine example of the collegiality found in blogging, Thomas I. Selling, PhD, CPA admired Alfred King (Marshall & Stevens) yesterday in an article “Entry Price vs. Exit Price: One (Really Smart) Appraiser's Point of View.” King had responded to one of Selling’s posts about FASB, to which Selling responded: “I have learned a great deal from my correspondence with Alfred; and although we don't agree on everything, we both will say without hesitation that the FASB's venture into exit prices has been a huge mistake.”
So Selling posted King’s email, as thoughtful and well-written as all of his articles. To illustrate the issues created by FASB’s SFAS 157, King uses an example of a Picasso painting up for auction:
“At an art auction at Sotheby's a Picasso is up for sale, and the bidding starts at $25 million and goes up in $1 million increments. At $29 million there are two bidders left; one of them raises to $30 million and the other drops out. Now the issue is "what is the value of the Picasso painting at that moment?
“Under the standard and well understood concepts of value most observers would feel the Picasso should be valued on the buyer's balance sheet at $30 million….under the FASB concept of Fair Value, the painting should be valued at only $29 million.”
Check out the article for King’s cogent (and amusing) article “Entry Price vs. Exit Price: "O what a tangled web we weave…" in the Accounting Onion. You’ll also find links to Selling’s articles on SFAS 157.
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