The Hedge Fund Law Report

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By Topic: Accounting for Financial Instruments

  • From Vol. 1 No.5 (Mar. 31, 2008)

    International Accounting Standards Board Issues Discussion Paper to Simplify Financial Instrument Reporting

    • IASB discussion paper identifies varying methods and rules as main cause of complexity in financial reporting.
    • Paper proposes revised reporting standards and seeks to replace IAS 39.
    • Paper suggests intermediate and long term approaches to problems related to financial instrument measurement.
    • Suggested interim approaches include simplifying measurement requirements; replacing existing requirements with fair value measurement principles; and simplifying or eliminating hedge accounting requirements.
    • Single, uniform fair value measurement method - appropriate for all types of financial instruments - urged as the most promising long term solution.
    • Cost-based measurement method rejected for failing to provide information about future cash-flow prospects.
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