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Topic: Fair value


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In the News (Tue 21 May 19)

  
  Fair Value Accounting
Under GAAP, the fair value of an asset is the amount at which that asset could be bought or sold in a current transaction between willing parties, other than in a liquidation.
On the other side of the balance sheet, the fair value of a liability is the amount at which that liability could be incurred or settled in a current transaction between willing parties, other than in a liquidation.
Maybe, if companies in the United States and Asia had measured all financial instruments at fair value, regulators, depositors, and investors could have achieved greater regulatory and market discipline and avoided some of the losses that investors and taxpayers have had to pay during previous downturns in the economy.
www.valuebasedmanagement.net /methods_fairvalue.html   (0 words)

  
  FRB: Speech, Bies--Fair Value Accounting--November 18, 2004
Fair values may be used as an analytic tool in the lending process and are compared with historical cost values.
If the hedged asset were measured at fair value, the changes in values of the hedged item and the credit derivative may offset each other, reducing the volatility that arises when only the derivative is marked to market and not the hedged item.
While at first glance the fair value option might be viewed as "the solution" to addressing the problems of the mixed-attribute model, it also raises a number of concerns.
www.federalreserve.gov /boarddocs/speeches/2004/20041118/default.htm   (2640 words)

  
 Fair Value   (Site not responding. Last check: )
The fair value of a financial instrument represents the amount at which the instrument could be bought or sold in a current transaction between willing parties.
If all financial instruments were measured at fair value with the related gains and losses included in income when they arise, far fewer special requirements would be necessary for the financial statements to depict the success or lack thereof of risk-management strategies, no matter how complicated.
Because a liability entails settlement, the estimate is, in effect, determined using a "settlement" valuation premise (fair value in settlement), similar to the in-exchange valuation premise for an asset (fair value in exchange).
www.executivecaliber.ws /sys-tmpl/fairvalue   (2396 words)

  
 Fair Value
It is stated that they support fair value under certain circumstances, but I think that statement is a mischaracterization, in that it appears they support fair value only when it coincides with cost accumulation, for example, in the case of an actively traded financial instrument held short-term.
Using fair value to measure non-financial assets and liabilities also produces income statements that are confusing and less useful than those produced by a cost-accumulation approach.
Fair value is observable only in those cases where it is not needed.
home.sprintmail.com /~humphreynash/Fair_Value.htm   (1682 words)

  
 Fair Value
The estimated value of all assets and liabilities of an acquired company used to consolidate the financial statements of both companies.
The "fair value" quoted on TV refers to the relationship between the futures contract on a market index and the actual value of the index.
If the futures are above fair value then traders are betting the market index will go higher, the opposite is true if futures are below fair value.
www.investopedia.com /terms/f/fairvalue.asp   (0 words)

  
 Auditing Fair Value Measures
Fair value is not investment value, which is the value to a particular buyer, nor is it fair market value, which describes the value when there is a hypothetical buyer and seller and is also the standard of value for tax reporting requirements.
The market approach estimates fair value by comparing a financial measurement or other metric of the subject company to a multiple of similar financial measurement or metric of a similar guideline company whose shares are transacted in the market place.
The present value of the residual cash flow is discounted at a rate reflective of the risk of the intangible asset in order to estimate the fair value of the specific intangible asset.
www.aicpa.org /pubs/tpcpa/oct2003/auditing.htm   (1530 words)

  
 Fair Value FAQ   (Site not responding. Last check: )
The cash index value sampled for use as the basis of the fair value calculation shall be based upon the next available live quotation of the index prior to 3:20 p.m.
Fair value represents the level at which futures theoretically should be priced in relation to cash index values in the absence of transaction costs – albeit not where they necessarily will trade.
Options on futures settlement values shall be established on the basis of the adjusted fair value futures settlements on days when FV settlement procedures are employed.
www.cme.com /trading/prd/equity/fairvaluefaq2544.html   (1177 words)

  
 Fair Value FAQ - Kansas City Board of Trade
A: Fair value, in the case of stock index futures such as the Value Line, is the theoretical value of a futures contract as compared to the price of the underlying cash index, based on the prevailing level of short-term interest rates and dividend yields.
However, the actual value of any futures contract or spread/straddle is determined by supply and demand in the open market and may, at any given time, vary substantially from its theoretical fair value.
Because the Kansas City Board of Trade calculates fair value for the Value Line before the start of each trading day, the number of days to expiration includes the day for which the fair value is being calculated.
www.kcbt.com /fair_value_faq.html   (704 words)

  
 FASB: Fair Value Measurements
Accordingly, the valuation should consider only facts and circumstances existing at the specified measurement date (events occurring prior to that date or that were reasonably foreseeable at that date) so that the valuation is reflective of a current transaction (as clarified) at that date.
The fair value of the asset group is determined using a going-concern or in-use valuation premise.
The fair value of the asset is determined using an in-exchange valuation premise.
www.fasb.org /project/fv_measurement.shtml   (5803 words)

  
 International Accounting Standards Board (IASB) Agenda: Fair Value Measurements
In the staff's view, the FASB's revised definition of fair value is substantively similar to the one tentatively approved by the IASB in December 2005.
The draft fair value measurement statement indicates that valuation techniques used to measure fair value shall maximise the use of observable inputs and minimize the use of unobservable inputs.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts.
www.iasplus.com /agenda/fairvalue.htm   (5031 words)

  
 Futures and fair value - Apr. 19, 2002
Understanding fair value begins with getting a handle on the relationship between a futures contract -- in this case the S&P 500 futures contract -- and the underlying commodity that the contract's value is derived from.
If they say, for example that fair value is "plus 10," the futures contract needs to be 10 points above the cash index's close the previous day in order to be at its fair value.
Fair value for the futures, according to those who calculate it, was 1041.45, or plus 2.65.
money.cnn.com /2002/04/19/markets/fair_value/index.htm   (1343 words)

  
 Fair value for dummies - Apr. 17, 2000
If they say, for example, that fair value is "plus 10," the futures contract needs to be 10 points above the cash index's close the previous day to be at its fair value relationship to cash.
    Fair value for the futures, according to those who calculate the figure, was 1,480.31, or nearly plus four.
This 1-to-8 relationship reflects the ratio between the value of the SandP 500 index and the Dow.
money.cnn.com /2000/04/17/investing/fairvalue   (1104 words)

  
 Accounting for Employee Stock Options
It proposed that firms recognize the fair value of the options (measured when the options are granted) as an expense on their income statements over the period in which employees perform the services for which the options serve as compensation.
The value of the firm is affected only when the options are granted--that is, when the firm incurred the cost of granting the options to employees as part of their compensation instead of selling the shares to investors.
Under the fair value method, the option holders' equity is transferred to owners' equity upon the exercise of the employee stock options, because exercising the options results in the option holders' receiving ownership shares.
www.cbo.gov /showdoc.cfm?index=5334&sequence=2   (6912 words)

  
 IAS Plus International Accounting Standards: IFRIC Agenda
On the other hand, the present value of cash flows expected from the harvest will not include the risks associated with the growth over the harvest period, and therefore will generally be greater than fair value.
The IFRIC discussed the requirement of IAS 41.21 that the objective of a calculation of the present value of expected net cash flows is to determine the fair value of a biological asset in its present location and condition, and that the present condition excludes any increases in value from additional biological transformation.
The IFRIC determined that ideally the fair value of the assets should be determined as the discounted value of the expected future cash flows, with the discount rate used including the risk factors associated with the successful biological transformation required before the asset is readily marketable.
www.iasplus.com /ifric/ias41fairvalue.htm   (1997 words)

  
 Mercer On Value: Fair Value -- the Price for Recapitalizations to Elect S Corporation Status   (Site not responding. Last check: )
Fair value is the legal standard of value in dissenting shareholder cases in the majority of states.
Some states have fairly clear judicial interpretations of the meaning of fair value such that appraisers can be advised as to the appropriate "level of value" in fair value appraisals.
Fair value is typically defined (my paraphrasing) to be determined as of the day prior to the transaction giving rise to the right to disent, and considering no impact of the transaction, either positive or negative, on the determination of fair value.
merceronvalue.com /archives/2005/08/fair_value_the_1.html   (2106 words)

  
 Financial Reporting: Fair Value Reporting
Fair values should be determined based upon the market values for identical or similar assets or liabilities.
Some have argued that fair value measurement will introduce estimates, inaccuracies and subjectivity into the financial statements, reducing their reliability and usefulness to investors and other users.
Although historical cost measures in many cases reflect fair values on the date of the transactions, such numbers are not updated or revised from the transaction date onward.
www.cfainstitute.org /centre/positions/reporting/fair_value_reporting.html   (428 words)

  
 Transitioning to the Fair Value Method
Even before adopting the fair value method, companies had to calculate the fair value of options, but the impact on earnings was simply disclosed in a footnote.
The intrinsic value of stock options is the amount by which the price of the underlying stock exceeds the exercise price at the date of measurement; that is, the earliest date that both the number of options and the option price are known.
Today, retroactive transition to the fair value method is a viable option because even companies that have continued to use the intrinsic value method have had to prepare pro forma disclosures under the fair value method for several years.
www.nysscpa.org /cpajournal/2004/604/essentials/p20.htm   (1739 words)

  
 Fair Value Measurement
Using the definition: “The fair value of an asset (or liability) is the amount at which that asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale“.
Thus, the fair value of a reporting unit refers to the amount at which the unit as a whole would be bought or sold in a current transaction between willing parties.
Using a valuation technique based on multiples of earnings, revenue or similar performance measures if consistent with the objective of measuring fair value.
www.fvginternational.com /SFAS/Fair_Value_Measurement.html   (276 words)

  
 Fair Value of Employee Stock Options
If your options were sold in an open market, "fair value" is the price that would be fair to both the buyer and the seller at the time of valuation.
Fair value is obtained from Nobel Prize winning formulas that determine fair falue based on calculated probabilities of the future price of your company stock and historical price data of your company stock.
Our fair value calculations are based on Nobel Prize winning formulas that have been used for many years to value stock options.
www.mindxpansion.com /employee-options/fairvalue.html   (188 words)

  
 DIVORCE HQ - Fair Market Value   (Site not responding. Last check: )
In a recent valuation I performed, the departing wife mentioned several times that when the next "up economic cycle" hits, the business "is going to be worth a lot of money." (Of course, she apparently was not willing to wait until that next "up economic cycle" to file for divorce.)
The fair market value standard requires that the value be determined, considering the hypothetical willing and able seller and the hypothetical willing and able buyer, when neither are under a compulsion to act and when both have reasonable knowledge of the facts
Fair market value is based largely on what is there now, as opposed to what might be there sometime after a lot of changes are made to the business.
www.divorcehq.com /articles/fairmarketvalue.html   (1400 words)

  
 Ernst & Young - Assurance - IFRS - How Fair is Fair Value
The examples used are based upon the share-based payments standard, IFRS 2, but also apply to pension liabilities, the fair valuation of intangible assets in a business combination, asset impairment calculations and the valuation of certain financial instruments.
Companies are increasingly being required to carry assets and liabilities in the balance sheet at ‘fair value’, and the fair value definition used by the IASB in its standards is essentially market value.
Where assets and liabilities are traded on active markets, their fair value may easily be determinable by preparers and understood by users of financial statements.
www.ey.com /global/content.nsf/International/Assurance_-_IFRS_-_How_Fair_is_Fair_Value   (693 words)

  
 Fair Value
The estimated value of all assets and liabilities of an acquired company used to consolidate the financial statements of both companies.
The "fair value" quoted on TV refers to the relationship between the futures contract on a market index and the actual value of the index.
If the futures are above fair value then traders are betting the market index will go higher, the opposite is true if futures are below fair value.
baystreet.investopedia.com /terms/f/fairvalue.asp   (148 words)

  
 Value Map Overview
This relationship can be conceptualized as a fair value line with each point on the line representing a specific combination of benefits and price that is considered a fair value by the market.
Competitors positioned on the value line are confronted with a fundamental decision: do they allow the new product to take market share or do they respond with a more competitive product offering (pricing or product changes) that protects their market position.
Either way, the market's value curve becomes recalibrated with customers expecting more benefits for the dollar than they were previously able to get.
faculty.msb.edu /homak/HomaHelpSite/WebHelp/Value_Map_Overview.htm   (1526 words)

  
 Fair-Value Accounting
SFAS 141 further indicates that intangible assets acquired in a business combination “should initially be assigned an amount based on their fair value.” Fair value is defined as the amount at which the asset could be bought or sold in a current transaction between willing parties.
In particular, it indicates that the fair value of an asset is the amount that the asset could be purchased or sold for in a third-party transaction.
Undoubtedly, valuing tangible and intangible assets at fair value is extremely difficult and time-consuming.
www.nysscpa.org /cpajournal/2006/406/essentials/p37.htm   (2350 words)

  
 FASB: Elective Fair Value of Financial Instruments
To expand the use of the fair value measurement attribute.
This project focuses only on the use of the fair value measurement attribute and, thus, will not address permitting entities to elect to recognize in earnings the change in an asset’s or liability’s fair value attributable to only certain selected risks (rather than the total change in fair value).
Accordingly, Statement 157 defines fair value, provides a hierarchy that prioritizes inputs that should be used in valuation techniques used to estimate fair value, and requires disclosures about the use of fair value to measure assets and liabilities recognized in the statement of financial position.
www.fasb.org /project/fv_option.shtml   (1629 words)

  
 Credit Suisse - Institutional - Research - Client Applications - Fair Value Swap Model
The Credit Suisse Fair Value Swap Model estimates a Fair Value level for the 10-year swap spread based on the historical relationship between the 10-year swap spread and factors that influence it.
The Fair Value swap models are based on weekly data beginning January 1, 1999.
Fair Value levels are updated as of close of business each Friday (or closest prior business day if Friday is a holiday).
www.csfb.com /institutional/research/fair_value.shtml   (264 words)

  
 Stock research and analysis: Finding a stock's fair value  (intrinisic value)
Most of the calculators came up with fair values in the $27 to $40 per share range, except for Quicken’s intrinsic value calculator.
The Motley Fool defines fair value to be the price where the earnings growth rate and the PE are equal (PEG = 1), but some analysts say fair value is when the PEG is 1.5 or even 2.0.
The fair value for Airborne using Present Value was $39.54.
www.winninginvesting.com /fair.htm   (1794 words)

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