A new FASB proposal aims to clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of the account, therefore is not considered in measuring fair value.
The proposed accounting standards update (Topic 820) states that when measuring the fair value of an asset or a liability, a reporting entity should consider the characteristics of the asset or liability, including restrictions on the sale of the asset or liability, if a market participant also would take those characteristics into account. Key to that determination is the unit of account for the asset or liability measured at fair value.
FASB encourages stakeholders to review and provide feedback on the proposal by Nov. 14. Learn more.