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pensions & OPEBs asset retirement obligations contributions received and made
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Definition
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value is an exit price.
Market participants
Buyers and sellers in the principal (or most advantageous) market
Independent of the reporting entity Knowledgeable Able to transact Willing to transact motivated but not forced
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Valuation techniques
Market approach: should be used as the primary, or confirmatory approach, if a market is observable Income approach: most often used when a market is not observable and a hypothetical market must be constructed Cost approach Multiple approaches may be used
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Derivatives
Beginning balance Total gains and losses (realized/unrealized) Included in earnings Included in OCI Purchases, issuances, and settlements Transfers in/out of Level 3 Ending balance 11 4 (7) (2) $20 $14
Total
$25
(3)
8 4
2 0 $10
$7
$2
$9
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How to evaluate the reasonableness of inputs to the valuation process and perform sensitivity analysis How to compute expected values, present values for partial periods and irregular streams of cash, and EVA
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