Chris, I respectfully disagree with your assertion that 'the movement toward this non-transaction accounting has been BECAUSE of lobbying by the financial analysts community.' I have been involved on the 'anti' side of this movement since its inception. In 2008, 'CFA Magazine' published one of my broadsides against fair-value accounting [FVA]; the same year, 'Strategic Finance' (the flagship publication of the Institute of Management Accountants' published a much longer, detailed piece that I wrote in strong opposition to FVA. I am happy to send PDFs of either or both of these to anyone who sends a note to me via [email protected].

In point of fact, we got FVA because the SEC said to FASB, in effect, 'No more Enrons.' Enron, you may recall, got into trouble for a number of reasons, not the least of which was that it valued the derivatives that Enron itself created. It inflated those values, which led to a dreadfully over-priced stock, when finally collapsed in 2002. Two of Enron's senior executives--CEO Jeff Skilling and CFO Andy Fastow--went to prison as a direct result. A third, chairman Ken Lay, died before he could be tried; had he lived, doubtless he would have joined Skilling and Fastow in a much-deserved trip to the slammer.

'No More Enrons' gave us SFAS 157 ("Fair Value Measurements"), which later morphed into ASC 820. The implementation side of FVA for M&A plays out in ASC 805 ("Business Combinations"). In my view, ASC 820 and ASC 805 constitute prime examples of the bad that can happen when 65 really smart people--the headcount @ FASB--have far too much time on their hands.

For those who might not aware, the definition of 'Fair Value' is not--repeat, NOT--the price that actually occurred in a transaction. It is defined thusly: "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." In other words, the price is not what was actually paid, but the price that could be obtained in some future--and almost always hypothetical--transaction. It's an 'exit price'.

In typical bean-counter fashion--and I am a CPA so I take license to use that characterization--the FASB folks failed to consider the incentives that such a definition would create: a bazaar (bizarre?) where assets and liabilities are traded in a frenzy, but creating annuity streams of revenue from high-value products and services is a secondary consideration. In my view, it's the greatest hoax since 'One size fits all.' I've done a slug of work under ASC 805 for clients and I can attest that if there's a difference between FVA and astrology, I've never detected it.

As to your reference to the analyst community, everything I've seen, and everything I've heard from others who are closer to the buy-side of that community, tells me that they ignore the 'impairments' in asset values, especially intangibles (usually Goodwill), as a result of annual impairment-testing. They just plain ignore it. That's why this bad idea of FVA didn't originate with them. It started @ the SEC.