FASB's ASU 2010-06: Expanded Requirements for Fair Value Disclosures

Description

Valuation specialists are well aware of the shortcomings in FAS 157, the 2008 standard on fair value measurements. Accounting Standards Update 2010-06, issued in late January, represents FASB's attempt to enhance usefulness and disclosures of fair value measurements—in considerable detail.

Effective with interim and annual reporting periods starting after Dec. 15, 2009, businesses and their valuation advisors must disaggregate information in some existing disclosures. Businesses must also provide more robust disclosures of valuation techniques and inputs into fair value measurements.

Specifically, companies now must disclose amounts and reasons for significant transfers between levels in the FAS 157 fair value hierarchy—and disclose and consistently follow a policy for recognizing such transfers, among other new duties. Familiarity with the terms of ASU 2010-06 is essential.

Listen as our panel of veteran advisers bottom-lines the key terms of ASU 2010-06 and suggests practical approaches to sharpen disclosures.

Outline

1. Background of other FASB initiatives to improve fair value disclosures
   1. FAS 157
   2. ASC 820-10 (fair value measurements and disclosures)
   3. ASC 715 (compensation—retirement benefits)
2. Material aspects of ASU 2010-06
   1. Disclosure of amounts of, and reasons for, transfers between fair value hierarchy levels
   2. Disclosure of, and following, policy for transfers between levels
   3. Separate presentation of gross information about purchases, sales, issuances and settlements in reconciliation disclosure of Level 3 measurements
   4. Disclosures of inputs and valuation techniques used in recurring and non-recurring Level 1 and Level 2 measurements
   5. Disaggregation of classes of assets and liabilities, in fair value measurement disclosures
   6. Effective dates
3. Disclosure scenarios likely to face businesses and valuation advisors
   1. Alternatives to comply with ASU 2010-06 in those scenarios

Benefits

The panel will better prepare you when it comes to:

• Establishing which asset and liability class information must be disaggregated in existing fair value disclosures.
• Making required disclosures of transfers, purchase and sale information, inputs, valuation techniques and other valuation-related activities in a clear fashion.
• Following the terms of ASU 2010-06 within the context of other FASB guidance on fair value disclosures and measurements.

Upon completing this seminar, an attendee will be familiar with the requirements of ASU 2010-06 and will get a renewed understanding of the terms of other FASB standards and guidance on fair value disclosures. An attendee will be prepared to translate the guidance into making clear and thorough disclosures.

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