Defining Issues | September 2021

 

Insight

FASB proposes clarification on fair value measurement

Proposed ASU would clarify that contractual sale restrictions are not considered in measuring fair value.

Mahesh Narayanasami

Mahesh Narayanasami

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-7355

Steven Kenney

Steven Kenney

Senior Manager, Dept. of Professional Practice, KPMG US

+1 617-988-1033

Robin Van Voorhies

Robin Van Voorhies

Director, Dept. of Professional Practice, KPMG US

+1 617-988-5637

The proposed ASU intends to resolve diversity in practice by  clarifying that contractual sale restrictions are not considered in measuring the fair value of an equity security.

Applicability

  • All entities with investments in equity securities measured at fair value that are subject to contractual restrictions on the sale of those securities 

Relevant dates

  • September 15, 2021 – FASB issued proposed ASU
  • November 14, 2021 – Comments due

Key impacts

The proposed ASU would:

  • clarify that contractual sale restrictions are not considered when measuring the fair value of an equity security;
  • introduce the term ‘restricted security’ to the ASC Glossary to help entities determine whether a restriction on sale is a contractual sale restriction;
  • amend an illustrative example to align with the proposed amendments; and
  • provide different transition requirements for investment companies compared to all other entities.

Report content

  • Fast facts, impacts, actions
  • Background
  • Proposed amendments to ASC 820
  • Effective dates and transition

Related content

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