FASB issued a standard in fall 2006 with the understated title Fair Value Measurements. On one hand, FASB Statement no. 157 appears to shake the foundation of historical cost measurement. On the other, it appears innocuous because it doesn’t compel greater use of fair values. In fact, the standard does a bit of both. Either way, CPAs should quickly acquaint themselves with the new rule, since it becomes effective for annual statements for fiscal years beginning after Nov. 15, 2007, and for interim reports prepared in that initial fiscal year.

Indeed, Statement no. 157 does not require fair values to be used in any situations not already covered by GAAP that existed at the time it was issued. However, it changes the status quo in three ways:

Read the full article here.