New Guidance on Accounting for GIK at Fair Value AERDO Conference December 7, 2009. Andrew Prather CPA Clark Nuber P.S. 425.635.4571 [email protected] Background. Contributions, including GIK, are required to be recorded at fair value
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FV assumes the highest and best use of the GIK by the market participants that is physically possible, legally permissible, and financial feasible. In other word, the use that would maximize the economic value of the GIK to the market participants.
Beneficiaries market: Often the principal market, but usually beneficiaries are not able to transact for the GIK and so they are not market participants, and therefore the beneficiaries market cannot be considered in the FV
Donative market: Groups with donative intent that provide GIK; usually cannot be used because these are contribution transactions and not exchange tranactions
Commercial market: This is the only market with reciprocal transactions; only market relevant for determining FV