Statement of Financial Accounting Standards No. 157 - Paper Audit ...

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services received in exchange, and other available evidence. If one of the parties in a nonmonetary transaction could have elected to receive cash instead of the nonmonetary asset, the amount of cash that could have been received may be evidence of the fair value of the nonmonetary assets exchanged. E4. FASB Statement No. 13, Accounting for Leases, is amended as follows: a. Paragraph 5(c): Fair value of the leased property. The price for which the property could be sold in an arm’s length transaction between unrelated parties.The price that would be received to sell the property in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers that are independent of the reporting entity, that is, they are not related parties at the measurement date. (See definition of related parties in leasing transactions in paragraph 5(a).) The following are examples of the determination of fair value: [For ease of use, the remainder of this subparagraph, which is unaffected by this Statement, has been omitted.] E5. FASB Statement No. 15, Accounting by Debtors and Creditors for Troubled Debt Restructurings, is amended as follows: a. Footnote 2 to paragraph 7: Defined in paragraph 13. b. Paragraph 13 and its related footnote 6, as amended, and footnote 5a, as added previously: A debtor that transfers its receivables from third parties, real estate, or other assets to a creditor to settle fully a payable shall recognize a gain on restructuring of payables. The gain shall be measured by the excess of (i) the carrying amount of the payable settled (the face amount increased or decreased by applicable accrued interest and applicable unamortized premium, discount, finance charges, or issue costs) over (ii) the fair value of the assets transferred to the creditor. 5 The fair value of the assets transferred is the amount that the debtor could reasonably expect to receive for them in a current sale between a willing buyer and a willing seller, that is, other than in 96
a forced or liquidation sale. Fair value of assets shall be measured by their market value if an active market for them exists. If no active market exists for the assets transferred but exists for similar assets, the selling prices in that market may be helpful in estimating the fair value of the assets transferred. If no market price is available, a forecast of expected cash flows 5a may aid in estimating the fair value of assets transferred, provided the expected cash flows are discounted at a rate commensurate with the risk involved. 6 5 Paragraphs 13, 15, and 19 indicate that the fair value of assets transferred or the fair value of an equity interest granted shall be used in accounting for a settlement of a payable in a troubled debt restructuring. That guidance is not intended to preclude using the fair value of the payable settled if more clearly evident than the fair value of the assets transferred or of the equity interest granted in a full settlement of a payable (paragraphs 13 and 15). (See paragraph 6 of FASB Statement No. 141, Business Combinations.) However, in a partial settlement of a payable (paragraph 19), the fair value of the assets transferred or of the equity interest granted shall be used in all cases to avoid the need to allocate the fair value of the payable between the part settled and the part still outstanding. 5a This pronouncement was issued prior to FASB Concepts Statement No. 7, Using Cash Flow Information and Present Value in Accounting Measurements, and therefore the term expected cash flows does not necessarily have the same meaning as that term in Concepts Statement 7. 6 Some factors that may be relevant in estimating the fair value of various kinds of assets are described in paragraphs 37 and 38 of Statement 141, paragraphs 12−14 of APB Opinion No. 21, “Interest on Receivables and Payables,” and paragraph 25 of APB Opinion No. 29, “Accounting for Nonmonetary Transactions.” c. Paragraph 28, as amended: A creditor that receives from a debtor in full satisfaction of a receivable either (i) receivables from third parties, real estate, or other assets or (ii) shares of stock or other evidence of an equity interest in the debtor, or both, shall account for those assets (including an equity interest) at their fair value at the time of the restructuring (see paragraph 13 for how to measure fair value). 16 A creditor that receives long-lived assets that will be sold from a debtor in full satisfaction of a receivable shall account for those assets at their fair value less cost to sell, as that term is used in paragraph 34 of FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The excess of (i) the recorded investment in the receivable 17 satisfied over (ii) the fair value of assets received (less cost to sell, if required above) is a loss to be recognized. For purposes of this paragraph, losses, to the extent they are not offset against allowances for uncollectible amounts or other valuation accounts, shall be included in measuring net income for the period. 97
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Financial Accounting Series NO. 284
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Summary This Statement defines fair
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(blockage factor). This Statement e
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instruments as of the beginning of
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Copyright © 2006 by Financial Acco
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Statement of Financial Accounting S
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disaggregated) for purposes of appl
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Application to Assets 12. A fair va
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of the elements in the transaction,
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paragraph 19). The disclosure provi
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sufficient to absorb the quantity h
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c. For fair value measurements usin
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38. At the date this Statement is i
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A3. The judgments applied in differ
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include those buyers that initially
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participants have technology in a m
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elevant data points in the market a
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in the fair value hierarchy within
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the one- and two-year options on th
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tions in which the price in a trans
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higher of its fair value in-use as
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measure fair value are required in
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Assets Measured at Fair Value on a
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d. The price for bearing the uncert
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liability being measured, it may be
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cash flows, it likely will be highe
Page 57 and 58: Appendix C BACKGROUND INFORMATION A
Page 59 and 60: Appendix C BACKGROUND INFORMATION A
Page 61 and 62: Scope Share-Based Payment Transacti
Page 63 and 64: epresent the fair value of the inst
Page 65 and 66: C20. Accordingly, the guidance for
Page 67 and 68: clearly, the Board revised the defi
Page 69 and 70: or liability (for example, a commod
Page 71 and 72: Application to Liabilities C39. For
Page 73 and 74: whether changes in a debtor’s cre
Page 75 and 76: entity’s credit standing makes th
Page 77 and 78: Valuation Techniques C53. This Stat
Page 79 and 80: C60. In its discussions, the Board
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Page 83 and 84: not sufficient to absorb the quanti
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Page 95 and 96: adjustment to the opening balance o
Page 97: International Financial Reporting S
Page 100 and 101: Pronouncement Statement 65* Stateme
Page 102 and 103: Pronouncement Interpretation 45* In
Page 104 and 105: Pronouncement FSP AAG INV-1 and SOP
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Page 110 and 111: E6. FASB Statement No. 19, Financia
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Page 114 and 115: cost or marketfair value for each t
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Page 120 and 121: Statement describe possible additio
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Page 124 and 125: . Paragraph 112 (glossary), as amen
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Page 130 and 131: value of an asset (or liability) in
Page 132 and 133: securities. An acquiring entity oft
Page 134 and 135: as the basis for the measurement, i
Page 136 and 137: of those cash flows that are embodi
Page 138 and 139: current rate. Any downward revision
Page 140 and 141: current credit-adjusted risk-free r
Page 142 and 143: Date Incurred 12/31/03 12/31/04 12/
Page 144 and 145: market prices in active markets are
Page 146 and 147: Course of Action Cash Flows Estimat
Page 148 and 149: i. Paragraph A13: The following tab
Page 150 and 151: accordance with paragraph 7, the en
Page 152 and 153: expected present value technique of
Page 154 and 155: E29. Statement 133 Implementation I
Page 156 and 157: upon the assignment because the pro
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