The Financial Accounting Standards Board has published a clarification on the application of "fair value" accounting where there is no market for a security, but it declined to suspend the fair-value rule entirely, as some had urged. Under the change, when an active market for a security doesn't exist, companies will be allowed to use their managers' estimates of value, taking into account expected future cash flow and risk discount rates. A spokesman for the FASB said the guidance gives companies "a wider range of options and input to get to fair value." Read the FASB staff position paper.
Published in Brief: