Val Mulcahy FAS 157 Mitigating Techniques
Val Mulcahy uses his years of experience in the financial services industry to serve as an independent consultant and lecturer on a variety of accounting and risk-management topics. His instructions, such as his course on Financial Accounting Standards No. 157 to measure fair market value, give listeners guidance on a detailed tax reporting rule. To use all of Mulcahy's techniques in mitigating fair value of equipment and financial instruments, professionals must have a clear understanding of financial markets, current practices and calculated risk. Some basic principles, though, can be implemented without that background.
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Instructions
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Estimate the impact of sales or market conditions as a mitigating, or reducing, factor when evaluating the worth of your physical item or financial instrument. Actual transactions, which Mulcahy terms "restrictions," can be assumed to have an effect on maintained assets. Thoroughly disclose your methodology when estimating restrictions to reduce your assets' fair market value.
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Compare the opening or last reported value of your assets to equivalent products or goods currently available on the open market. This mitigating factor, using established and proven numbers, can be a solid basis for changing the fair market value of your reported assets.
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Evaluate the current availability of your asset, such as whether it is eligible for transaction. If an investment or other asset is not liquid, meaning it cannot be readily available for use, the time necessary to free up the product or good can be considered a mitigating factor in its open market value.
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Tips & Warnings
Mulcahy strongly recommends you apply your methodology consistently when determining fair market value of assets. This is so board members and financial observers will be able to accurately evaluate your business practices.
