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?

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: