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

value of an asset (or liability) in paragraphs 42−54 and 75−88. The Board believes that an
expected present value technique is superior to traditional “best estimate” techniques,
especially in situations in which the timing or amount of estimated cash flows is uncertain, as
is often the case for interests that continue to be held by a transferor in transferred financial
assets. Concepts Statement 7 also discusses in paragraph 44 the steps needed to complete a
proper search for the “rate commensurate with the risk” in applying the traditional technique.
21 The timing and amount of future cash flows for interests in securitizations that continue to
be held by a transferor are commonly uncertain, especially if those interests are subordinate to
more senior beneficial interests. Applying the present value approach depends heavily on
assumptions about default and prepayment of all the assets securitized, because of the implicit
credit or prepayment risk enhancement arising from the subordination.
f. Paragraph 364 (glossary):
Fair value
Refer to paragraphs 68−70.
E21. FASB Statement No. 141, Business Combinations, is amended as follows:
a. Paragraph F1 (glossary):
Fair value
The amount at which an 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.
E22. FASB Statement No. 142, Goodwill and Other Intangible Assets, is amended as
follows:
a. Paragraph 3:
Appendix A to this Statement provides implementation guidance on how
intangible assets should be accounted for in accordance with this Statement.
Appendix A is an integral part of the standards provided in this Statement.
Appendix B provides background information and the basis for the Board’s
conclusions. Appendix C provides illustrations of some of the financial
statement disclosures that this Statement requires. Appendix D lists other
accounting pronouncements superseded or amended by this Statement.
Appendix E includes relevant excerpts from FASB Concepts Statement No. 7,
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