Fair Value: Diversity in Measuring Investments at the Net Asset Value (NAV) per Share

Dahli Gray () and Laura Rodriquez ()
Additional contact information
Dahli Gray: Graduate School Professor Keiser University 1900 W. Commercial Blvd. Fort Lauderdale, FL 33309, Florida, USA
Laura Rodriquez: Accounting and Finance Coordinator IBOPE Media 3191 Coral Way #1000 Miami, FL 33145, Florida, USA

Business, Management and Economics Research, 2015, vol. 1, issue 3, 24-32

Abstract: This article analyzes a current financial reporting and accounting issue regarding diversity in financial reporting practice. Since the Financial Accounting Standards Board (FASB) first issued accounting statement 157 Fair Value Measurements, entities have been required to measure investments at fair market values. This included the requirement to categorize investments within a fair value hierarchy in preparation to report such in the financial statements. To do this, the FASB allows companies to either categorize the investment in the fair value hierarchy using three different input levels (Level 1, 2 and 3) or by estimating the net asset value as a practical expedient. If the entity uses the practical expedient, the investment would be placed within the fair value hierarchy based on whether the investment is redeemable with the investee at the measurement date, never redeemable, or redeemable in the future. Based on this information, the investment would be placed in either level 2 or 3 of the hierarchy. As a result, there is diversity in practice when estimating the length of time in the near term the investment would be redeemed. This article reports the results of evaluating how can the diversity in accounting practice related to how certain investments measured at net asset value are categorized within the fair value hierarchy be resolved. The results of the qualitative research conducted on the FASB proposal concluded that fourteen out of the eighteen public comment letters agreed with FASB proposal that eliminating the requirements to classify these investments in the fair value hierarchy would increase comparability in accounting practice among entities.

Keywords: Financial accounting; Fair value hierarchy; FASB; Investments; Share value; Net Asset Value. (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.arpgweb.com/pdf-files/bmer1(3)24-32.pdf (application/pdf)
http://www.arpgweb.com/?ic=journal&journal=8&month=07-2015&issue=3&volume=1 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arp:bmerar:2015:p:24-32

Access Statistics for this article

Business, Management and Economics Research is currently edited by Dr. Syed Zulfiqar Ali Shah

More articles in Business, Management and Economics Research from Academic Research Publishing Group Rahim Yar Khan 64200, Punjab, Pakistan.
Bibliographic data for series maintained by Managing Editor ().