ACCT 6230 Week 4

Week 3 Assignments-Fair Value

DUE DATE: Sunday midnight of Week 2, submitted in a MS Word (or Excel if

computations required) document with filename format:

Last First_Week X hwk.doc or .xls Make sure your name appears on each page of the

homework using the header function.

Homework questions:

1. Why was Statement 157 issued?

2. What are the acceptable methods, per FAS 157 of determining fair value? Briefly

summarize what the different levels mean and the ease or difficulty with which an

accounting department might have in finding ways to value assets and liabilities that fall

in each category.

3. Explain what the notion of “exchange price” is and how it relates to Statement 157 Fair

Value. What is the “measurement date” of a transaction that is to be measured at fair

value? What are “entry price” and “exit price” and why do you think Fair Value is

measured at the “exit price”?

4. List at least 3 pros and 3 cons about Fair Value reporting and write a brief description of

why each is a good or bad thing about Fair Value. Consider both the viewpoint of the

investor/market/user of the financial statements, and the viewpoint of the company that

has to try to apply these new valuation methods. Next week you will be asked where you

stand on Fair Value, so use this as a way to begin forming an opinion.