The Financial Accounting Standards Board has decided to issue final guidance that would defer for a year the effective date on which private and public entities would have to account for fair value measurements.

At its Nov. 14, 2007 meeting, FASB decided to defer the effective date of Statement 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FASB authorized the staff to proceed to a draft of a proposed FASB Staff Position for vote by written ballot, with a comment period of 30 days.

Statement 157 was issued on September 15, 2006, and as issued, is effective for financial statements issued for fiscal years beginning after Nov. 15, 2007, and interim periods within those fiscal years. Some preparers and others have observed, however, that in many areas they are having difficulty resolving implementation issues related to nonfinancial assets and nonfinancial liabilities that are acquired in a business combination or in the determination of impairment for nonfinancial assets and nonfinancial liabilities since those fair value measurements frequently rely on unobservable inputs.

Accordingly, a partial deferral of the effective date of Statement 157 will allow for more time to resolve these issues without eliminating many of the statement's improvements to financial reporting.

FASB has received comments on the partial deferral, but rejected requests from two respondents that it fully defer the effective date for private or small companies. Private companies will have the same deferral requirements as public companies.

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