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Articles & Reports
Understanding the Issues—Measuring Fair Value
The FASB recognizes its responsibility to maintain a
continuing dialogue with constituents, especially when it
introduces new ideas. To judge by the comment letters, many have
interpreted Concepts Statement 7 as far more complex and difficult
than the Board intended. Others may not have understood (or may not
have accepted) the rationale behind the Board's conclusions. With
that in mind, the Board and staff have prepared a series of
articles to communicate both its rationale and its expectations for
applications of Concepts Statement 7.
This is the third in a series of articles that
explore the application of Concepts Statement 7. Previous articles
discussed (1) the use of an expected-cash-flow approach to
measurements and (2) the conceptual rationale behind the use of
fair value as a measurement objective. In this article, we turn our
attention to the problems of estimating fair value and provide some
guidance on using cash flows in the estimation process.
Measuring Fair Value
June 2001–Volume 3, Series 1
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