In one of its last meetings of 2009, the Financial Accounting Standards Board (FASB) reviewed the 110+ comments it received regarding its Exposure Draft (ED), Improving Disclosures about Fair Value Measurements. The Board deferred amending the Level 3 sensitivity disclosures until it convenes on its joint project with the IASB, but added the following disclosure requirements:
- Transfers in/out of Levels 1/2. A reporting entity shall disclose separately the amounts of significant transfers in and out of Levels 1and 2 and list the reasons for the transfers.
- Activity in Level 3. In reconciling fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separate information about purchases, sales, issuances, and settlements, on a gross rather than net basis.
The Update will also clarify existing disclosure requirements:
- Level of disaggregation. A reporting entity should provide disclosures for each class of assets and liabilities, and apply judgment in determining the appropriate classes.
- Disclosures about inputs and valuation techniques are required for both recurring and nonrecurring fair value measurements, Level 2 or Level 3.
Effective date. The final amendments will be effective for reporting periods beginningafter December 15, 2009, with the exception for the Level 3 activities, above, which will be effective for fiscal years beginning after December 15, 2010, according to its project update. Early adoption is permitted. The Board expects to issue the final Update by the end of 2009.
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