Issued by FASB in 2006, SFAS 157, Fair Value Measurements, provides a comprehensive framework plus specific implementation guidance on the measurement of fair value and required disclosures. SFAS 157 itself does not require that fair value be applied to specific items; it merely clarifies how to value items that must be measured as such. SFAS 157 includes sections on its scope, fair value measurement, initial recognition, valuation techniques, inputs to valuation techniques, fair value hierarchy, disclosures, and transition issues. Management should aim for the most representative and reliable estimate, while maximizing the quality of the inputs and considering the particular attributes affecting the fair value. In measuring the fair value of assets and liabilities, it is the selling price that is of significance, according to SFAS 157. SFAS 157 offers a single definition of fair value that will assist in the assessment of the reliability of fair value measures and could enhance consistency and comparability in financial reporting.
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