With great anticipation I was awaiting FASB Statement 159, "The Fair Value Option for Financial Assets and Financial Liabilities." I was a bit shocked by it when it came out. Two aspects really bothered me --one, that it is an option, and two, that to a great extent, it can be applied on an instrument-by-instrument basis. I will not go into a discussion of the standard, except for the narratives explaining the dissent of two members of the seven-member of the Financial Accounting Standards Board. Thomas Linsmeier dissents from its issuance because he believes a fair value option generally won’t result in financial reporting that achieves many of the expressed objectives for issuing FASB 159.

For example, he feels providing entities with an instrument-by-instrument option often will result in the reporting at fair value of only some instruments, and will not result in reporting more representative of entities’ economic exposure. He thinks FASB 159 will provide an opportunity for entities to report significantly less earnings volatility than they are exposed to. He also expresses the opinion that users’ costs will be increased in processing the information introduced by treatment alternatives that reduce the comparability of reported results within and across reporting entities and line items.

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