17 / May 2011
Expect even more valuation disclosures under Topic 820, King predicts
Last week FASB issued Accounting Standards Update No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. BVWire asked Al King (Marshall & Stevens) to comment on the changes:
Much of this is new release is just housekeeping between GAAP and IFRS. What’s disappointing is that the Boards continually increase required FV disclosures. Maybe analysts can use such information but for most corporate financial reports it is truly ‘non-value added’, increasing costs, bulking up the reports and providing little useful information. True, if you use a 15% discount rate you get a different answer from using a 14% discount rate, but how can a reader determine which is more appropriate? Also the two Boards continue to pretend that there is no such thing as a blockage discount. Once more, this is a triumph of theory over economic reality.Most companies will adopt the fair-value measurement changes in early 2012.