On January 7, the Financial Accounting Standards Board (FASB) issued a proposed accounting standards update (ASU) that clarifies the scope and applicability of a disclosure exemption that is specific to private companies and nonpublic not-for-profit organizations. This ASU resulted from the issuance of a previous ASU, 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.
The proposed amendment exempts private companies and nonpublic not- for-profit organizations from the requirement to disclose the level of the fair value hierarchy within which the fair value measurements are categorized (i.e., Levels 1, 2 or 3) for items that are not measured at fair value in the statement of financial position, but for which fair value is disclosed in the financial statements. The most common examples for private companies and nonpublic not for profit organizations are notes and bonds payable and receivable.
The proposed update is available for review, and comments are due back to the FASB by January 22, 2013. The proposed update as currently drafted will be effective upon its issuance.
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