Snowy Ridge Ski Resort: Fair Value Measurement and the Impairment of Long-Term Assets

2010 ◽  
Vol 25 (1) ◽  
pp. 59-70 ◽  
Author(s):  
Richard A. Gore ◽  
Paul J. Herz
Keyword(s):  
Real Estate ◽  
Input Data ◽  
Fair Value ◽  
Measurement Standard ◽  
Ski Resort ◽  
Subsequent Test ◽  
Fair Value Measurement ◽  
Value Measurement

ABSTRACT: The Snowy Ridge Ski Resort case study illustrates the use the new Fair Value Measurement Standard (SFAS No. 157) with various assets in connection with the acquisition of a ski resort and subsequent test for impairment. The case study introduces students to the two primary approaches for measuring fair value (Market and Income). These approaches are then used to compute fair value for a variety of assets. In addition, students become familiar with the Fair Value Hierarchy and classify fair value measures in accordance with the hierarchy. The assets to which the fair value measures are generated include: marketable securities; property, plant, and equipment; real estate under development; and goodwill. The fair values and other input data are then used to test for impairment of the operating assets and goodwill. Thus, the case study illustrates the interplay between fair value measurement and impairment testing in a simple setting to give the student a foundation for understanding how fair value measurement is used in GAAP for operating assets.

DISCUSSION ASPECTS OF PROPERTY VALUATION FOR TAX PURPOSES

2019 ◽  
pp. 64-75
Author(s):  
R. Volchek
Keyword(s):  
Real Estate ◽  
Property Rights ◽  
Financial Reporting ◽  
Fair Value ◽  
The State ◽  
National Standard ◽  
Comparative Approach ◽  
Property Valuation ◽  
Fair Value Measurement ◽  
Value Measurement

The author's vision on the process of estimating the value of real estate objects for the purposes of taxation is given. It is established, that the current norms of valuation of property for taxation purposes, established by the main regulator of valuation activity in Ukraine − the State Property Fund of Ukraine, deprive transparency the process of valuation of property in our state, and offset personal accounting judgments when assessing real estate. Opacity and distortion of the current norms of normative legal acts regulating the process of valuation of property and property rights in Ukraine, as well as the norms of the International Financial Reporting Standards (further − IFRS) 13 «Fair Value Measurement» during the valuation of real estate objects, consists, according our opinion, representatives of the State Property Fund of Ukraine during the approval of property valuation reports for tax purposes are based on the estimated value of the objects, which should be determined solely on the basis of the prices of real estate offers and solely by means of a comparative approach. But, IFRS 13 «Fair Value Measurement» and National Standard 1 «General Principles of Valuation of Property and Property Rights» demand to determine the value of objects of evaluation in three methods: costly, cost-effective and comparative. Recommendations are introduced, implementation of which will allow to observe the transparency and correctness of determining the value of property for tax purposes.

scholarly journals Does Market Welcome the International Convergence of Fair Value Standard in China?

2017 ◽  
Vol 3 (2) ◽  
pp. 1
Author(s):  
Dehong Wang ◽  
Jianbo Song ◽  
Yue Zhang
Keyword(s):  
Fair Value ◽  
Measurement Standard ◽  
Accounting Standard ◽  
Market Reactions ◽  
Fair Value Measurement ◽  
Draft Version ◽  
International Convergence ◽  
Application Of Cas ◽  
Value Measurement ◽  
The Way

This paper studies the international convergence of fair value measurement standard and examines market reactions towards the emergence of the standard in China. Through comparing the fair value measurement standard between IFRS 13 and newest Chinese accounting standard CAS 39, we find that CAS 39 is on the way of international convergence towards IFRS 13. Through examining market reactions to CAS 39, we find that market has significantly positive reactions to the draft version exposure, official announcement, and enforcement of CAS 39. Moreover, we find that investors have different attitudes to the applications of CAS 39 in financial and non-financial industries. Investors consistently support CAS 39 in non-financial industries. However, in financial industries, investors react positively in the draft version exposure of CAS 39, but negatively in the official announcement and enforcement of CAS 39. We believe that investors worry about the application of CAS 39 in Chinese financial industries.

The decision usefulness of reported changes in fair values and fair value measurement-related disclosure for debtholders: evidence from Australian real estate industry

2020 ◽  
Vol 33 (6) ◽  
pp. 729-747
Author(s):  
Pinprapa Sangchan ◽  
Haiyan Jiang ◽  
Md. Borhan Uddin Bhuiyan
Keyword(s):  
Real Estate ◽  
Financial Reporting ◽  
Fair Value ◽  
Cost Of Debt ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
Fair Value Measurement ◽  
The Cost ◽  
Value Measurement

Purpose This paper aims to examine the information content of changes in fair values of investment property reported under international accounting standards (IAS) 40 and International Financial Reporting Standards (IFRS) 13 to debtholders. This study further examines the effect of fair value hierarchy inputs, valuer types and the quality of fair value measurement-related disclosure on the information usefulness of changes in fair value. Design/methodology/approach This paper performs a panel regression on the cost of debt capital and changes in fair value of investment properties, and fair value measurement features using data covering periods 2007–2015 from Australian real estate companies. Findings The findings suggest that changes in fair value of investment property are informative about the real estate firm’s future cash flow to debtholders. Also, the findings show that the use of unobservable inputs in an active market (Level 3 inputs) and Level 2 has no different impacts on the cost of debts. Also, this paper documents that employing the directors solely in valuation may lead to a higher cost of debts. Furthermore, this paper reports that an extensive fair value disclosure appears no additional value in the debt decision. Originality/value Collectively, the findings indicate that although the use of unobservable inputs is common in the real estate sector, information on the changes of the fair value of investment properties are informative to debtholders. The findings have important implications for accounting standard setters to consider revisiting the IAS 40 and IFRS 13 on whether the independent valuation should be required and whether the extensive disclosure requirement is worthwhile.

The Relevance of the Fair Value Measurement Hierarchy: A Holistic Perspective

2019 ◽  
Author(s):  
Andrei Filip ◽  
Ahmad Hammami ◽  
Zhongwei Huang ◽  
Anne Jeny ◽  
Michel Magnan ◽  
...  
Keyword(s):  
Fair Value ◽  
Holistic Perspective ◽  
Fair Value Measurement ◽  
Value Measurement
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