The History and Evolution of Fair Value Accounting

The history and evolution of fair value measurement encompasses the recent convergence of U.S. generally accepted accounting standards and international accounting standards pertaining to fair value measurement. The five-year joint Financial Accounting Standards Boards (FASB) and International Accounting Standards Board project was undertaken to improve and align fair value measurement and disclosure requirements and to respond to the global financial crisis. As originally promulgated, the FASB's Statement of Financial Accounting Standards 157, Fair Value Measurements and Disclosures, influenced the development of International Financial Reporting Standard 13, Fair Value Measurement. The convergence has shaped U.S. accounting standards through updates to FASB Accounting Standards Codification 820. In order to better understand fair value measurement, this chapter covers the history and evolution of fair value measurement in financial reporting. It also presents an overview of the key concepts covered in the subsequent chapters of this book.