After reading an article about the controversy of companies using fair value accounting, the new auditor, Kelle, comes to you with questions. You decide to provide the new hires with some information on fair value accounting.
Send them a memo defining and discussing fair value accounting. This memo needs to include the following:
Explain what the FASB Statement No. 157 is and why it came about.
Explain whether you think Statement No. 157 properly addressed the fair value issue and why or why not.
Describe at least 2 different valuation methods.
Explain which valuation method you believe is the best (fair value is an option), and support your answer with rationale and cited evidence.