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Question IFRS7-1

Intermediate Accounting (Kieso)
Found in: Page 385

Short Answer

What are some steps taken by both the FASB and IASB to move to fair value measurement for financial instruments? In what ways have some of the approaches differed?

The split model is introduced for stating business entities to report financial instruments at their fair value. There is a difference between recording the impairment losses and gains under IASB and FASB.

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Step by Step Solution

Definition of IASB

The board responsible for developing the regulations in international financial statement reporting is IASB (International Accounting Standard Board).

Steps Taken by FASB and IASB for Fair Value Measurement

Both IASB and FASB state that the financial instruments must be recorded on their fair value because it increases the financial statements' understandability and transparency. All other financial assets must be reported at their amortized cost when the financial asset meets some specified criteria.

Difference in Approaches

The difference that exists between the approaches of IASB and FASB is the accounting for impairment of the financial instruments. Under the IASB approach, the allowance is estimated for a shorter future than FASB.

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