FASB Proposes Improvements to Guidance on Measuring the Fair Value of Equity Securities

The FASB has issued a proposed Accounting Standards Update (ASU), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The proposal would reduce diversity in practice and increase comparability by eliminating discrepancies related to the nature of the unit of account in the measurement of an equity security’s fair value. Specifically, the proposed amendments would clarify that “a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.”

Comments on the proposed ASU are due by November 14, 2021. For more information, see the press release on the FASB’s Web site.