The Financial Accounting Standards Board busily set about tying up loose ends last week on a number of projects, including further defining fair value in its project to account for all financial instruments at that measure.

The board decided that quoted market prices in active markets are the best evidence of fair value and should be used as the basis for the measurement, if available. If a quoted market price is available, the fair value is the product of the number of trading units times the market price. If a quoted market price for an asset or a liability with essentially the same characteristics, including the same expected cash flows, is available, that price generally should be the basis for fair value. If a quoted price for fair value is not available, the estimate should consider prices for similar assets or similar liabilities and the results of the valuation techniques. Information from market sources is presumed to be superior to valuation techniques based on discounting of internally estimated cash flows.

The board also decided that potential blockage factors and control premiums should not be considered in determining the fair value of financial instruments.

In other news, the board approved the Accounting Standards Executive Committee’s (AcSEC) exposure draft of a statement of position on Accounting and Reporting for Certain Employee Benefit Plan Investments and Other Disclosure Matters. The proposed accounting changes, which define benefit plans and what has to be disclosed about the investments the plans make, will be published in about a month for public comment. Then the board must reexamine the proposal in light of comments and decide whether or not to approve the statement. The final statement is expected to be out by the summer.