Handbook: Fair value measurement
Handbooks | November 2025
Latest edition: Applying fair value measurement and disclosure guidance under US GAAP and IFRS® Accounting Standards.
We address frequently asked questions about applying the fair value measurement and disclosure guidance, highlighting the differences between US GAAP and IFRS Accounting Standards.
Applicability
- ASC 820 and IFRS 13
- All companies whose financial statements include fair value estimates, either in measuring the carrying amount of assets and/or liabilities or in note disclosures.
Determining fair value in times of uncertainty
To make their investing and financing decisions, users of the financial statements focus on a company’s future prospects, so fair value measurements play an important role in financial reporting. They can provide users with relevant information about the expected future cash flows associated with a company’s assets and liabilities under current market conditions.
Companies regularly reassess the judgments, inputs, and key assumptions that underpin their fair value measurements, but these assessments can be difficult in times of uncertainty. Companies are navigating a multitude of challenges, including the rise of artificial intelligence, the transition to a greener economy, uncertainties around tariffs and international trade policies, and the implementation of new global taxes. These shifts could present significant challenges to determining fair value.
Also, the valuation process may become more sophisticated for some assets and liabilities, and the amount of judgment may increase over valuation inputs.
Therefore, it is important that companies’ financial statements tell a clear story, particularly about key assumptions, judgments, and measurement uncertainties.
Report contents
- Scope and overview
- The item being measured and the unit of account
- Market participants
- Principal, most advantageous and inactive markets
- Valuation approaches and techniques, and inputs to valuation techniques
- Fair value hierarchy
- Highest and best use
- Liabilities and own equity instruments
- The portfolio measurement exception
- Disclosures
- Application issues
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