FASB pushes mark-to-market

A dispute is brewing between the American accounting standards board (the FASB) and the international board (the IASB) over whether all assets should be marked to market. The American board (by a 3-2 vote) says yes; the international board wants to maintain the status quo, which says that historical cost is fine for assets that are held to maturity.

The FASB’s position frankly doesn’t make any sense. For an asset that is held to maturity, exposing the day-to-day volatility of its market value is misleading, not revealing. Moreover, many assets simply aren’t liquid enough to be marked to market anyway. Given that it can’t be done universally, or even close to universally, why be so dogmatic about mark-to-market?

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