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#850890 - 11/07/07 08:02 PM Fair value accounting
KYAuditor Offline
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KYAuditor
Joined: Jan 2003
Posts: 138
Kentucky
I am looking for information on fair value accounting. If anyone knows of any seminars, manuals, or other resources that I could use to determine the proper methods for calculating fair value on loans and investments, I would appreciate your input.
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#851214 - 11/08/07 05:00 AM Re: Fair value accounting KYAuditor
Jokerman Offline
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Joined: Nov 2003
Posts: 12,846
Did you read the FASB statements? (159, 115)

Are you trying to model IRR? Prepare f/s footnotes? Audit one or the other?

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#851486 - 11/08/07 05:04 PM Re: Fair value accounting Jokerman
KYAuditor Offline
100 Club
KYAuditor
Joined: Jan 2003
Posts: 138
Kentucky
I have looked at the FASB's. I guess that I am looking for something in layman's terms to help explain the process.
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Just my 2 cents worth--for what its worth!!

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#852037 - 11/09/07 04:21 AM Re: Fair value accounting KYAuditor
Jokerman Offline
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Joined: Nov 2003
Posts: 12,846
The idea of fair value accounting is to report a fair market value on the balance sheet for each asset, rather than a traditional book value. You're probably familiar with how you already account for your available-for-sale investment portfolio under FAS 115. It's the same thing on loans, just trickier to come up with a fair value.

Say your balance sheet consists of one loan you made to me a year ago at 6%. Depending on what kind of rate you would be able to charge on a similar loan today, that loan may have a fair value that is more or less than the principal balance. Depending on how long the loan is scheduled and likely to be outstanding, the fair value may differ a lot, or not much at all from the book value.

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