Financial Accounting Standard

Reply to post 1:
In update 2016-01, it was stated that if there is are any observable price changes in the
transactions of similar investment of the same issuer, then the entity should measure that
transactions/ securities at fair value on the date of observable event. Due to this amendment,
mainly two issues were arising: whether the entity should consider observable transaction that
require it to discontinue or apply equity method of accounting; Whether certain forward
contracts or purchased securities will be accounted under equity method of accounting
(FASB 2020, update 2020-01). The amendment clarified for first issue that the entities should
consider measurement alternatives immediately before applying or discontinuing the equity
method (FASB 2019, Update 2019-12). For second issue, the amendment clarified that the
entities should not consider measurement alternatives for forward contracts and purchased
options and should evaluate the balance features of paragraph 815-10-15-141.
As per update 2019-12, an entity should recognize a franchise tax and similar tax will be
treated as non- income- based tax. Further an entity should evaluate the business combination
transactions when there is step up in the tax basis for goodwill.
Reply to post 2:
Yes, we are agreed with the student post. The Accounting standard update 2019-15 has
provided the entities an irrevocable option to select fair value methodologies on instrument-
by- instrument basis for certain kind of financial assets. This option is available on such
financial assets which were previously recognized and measured at amortized costs (FASB
2020, recently completed projects). This option is not available for held- to maturity debt
securities. It will help to reduce the fair valuation costs and will help to increase transparency