Fair values are more common in financial reports because fair values have increased inbusiness importance in recent years. Increasingly elaborate financial instruments andrisk management practices have created financial statement elements for whichhistorical cost is almost irrelevant, and fair value, and fluctuations in fair value, areextremely relevant. According to the FASB's recent guidance on fair value measurements ASC820–10–5 (FAS-157, Fair Value Measurements), Level 3 hierarchy accepts fair values estimates based on present value of expected future cash flows. Furthermore, CPAs must have a working knowledge of future value and present value concepts because of their application to numerous types of business events and transactions which requireproper valuation and presentation. Time value of money is also a critical consideration in financial and investmentdecisions. For example, compound interest calculations are needed to determine futuresums of money resulting from an investment. Discounting is used to evaluate the futurecash flow associated with capital budgeting projects. This book aims at presenting thetime value tools and techniques that are necessary for fair value measurements and forvarious financial decision making. Furthermore, this book is a comprehensive surveyof fair value accounting with a discussion of : (1) ASC 820, Fair Value Measurementsand Disclosures, (2) A list of the financial statement items for which fair value reportingis required or allowed. (3) A variety of valuation models, and (4) Fair value disclosurerequirements.
