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What is 'FASB 157'
A Financial Accounting Standards Board (FASB) Statement that requires all publicly-traded companies in the U.S. to classify their assets based on the certainty with which fair values can be calculated. This statement created three asset categories: Level 1, Level 2 and Level 3. Level 1 assets are the easiest to value accurately based on standard market-based prices and Level 3 are the most difficult.
Explaining 'FASB 157'
FASB 157 was passed to help investors and regulators understand how accurate a given company's asset estimates truly were. Many firms (including some of the largest in terms of assets) had to write down billions of dollars in hard-to-value Level 3 assets following the subprime meltdown and related credit crisis, which began in late 2006. By making companies report to investors the breakdown of assets, they allow investors to potentially see what percentage of the balance sheet could be open to revaluation or susceptible to sudden write-downs.
- The Association Between Sfas No. 157 Fair Value Hierarchy ... [smeal.psu.edu]
- Summary Of Fasb Statement No. 157, Fair Value Measurements [zicklin.baruch.cuny.edu]
- Market Pricing Of Banks' Fair Value Assets Reported Under Sfas 157 ... [web-docs.stern.nyu.edu]
- To Fair Value Or Not To Fair Value: A Broader Perspective [people.stern.nyu.edu]
- Sfas 157 & The Market's Assessment Of Fair ... [repository.upenn.edu]
- New Insights From Sfas 141(r) [merage.uci.edu]