The methods used to determine the estimated current values of assets and the estimated current amounts of liabilities shall be followed consistently from period to period unless the facts and circumstances dictate a change to different methods.
Personal financial statements shall present receivables at the discounted amounts of cash the person estimates will be collected, using appropriate interest rates at the date of the financial statements.
Marketable securities include both debt and equity securities for which market quotations are available. The estimated current values of such securities are their quoted market prices. The estimated current values of securities traded on securities exchanges are the closing prices of the securities on the date of the financial statements (valuation date) if the securities were traded on that date. If the securities were not traded on that date but published bid and asked prices are available, the estimated current values of the securities shall be within the range of those prices.
For securities traded in the over-the-counter market, quotations of bid and asked prices are available from several sources, including the financial press, various quotation publications and financial reporting services, and individual broker-dealers. For those securities, the mean of the bid prices, of the bid and asked prices, or of the prices of a representative selection of broker-dealers quoting the securities may be used as the estimated current values.
An investor may hold a large block of the equity securities of an entity. A large block of stock might not be salable at the price at which a small number of shares were recently sold or quoted. Further, a large noncontrolling interest may be difficult to sell despite isolated sales of a small number of shares. However, a controlling interest may be proportionately more valuable than noncontrolling interests that were sold. Consideration of those factors may require adjustments to the price at which the security recently sold. Moreover, restrictions on the transfer of a security may also suggest the need to adjust the recent market price in determining the estimated current value.
If published prices of options are unavailable, their estimated current values shall be determined on the basis of the values of the assets subject to option, considering such factors as the exercise prices and length of the option periods.
The estimated current value of an investment in life insurance is the cash value of the policy less the amount of any loans against it.
Intangible assets shall be presented at the discounted amounts of projected cash receipts and payments arising from the planned use or sale of the assets if both the amounts and timing can be reasonably estimated. For example, a record of receipts under a royalty agreement may provide sufficient information to determine its estimated current value. The cost of a purchased intangible shall be used if no other information is available.
Nonforfeitable rights to receive future sums that have all the following characteristics shall be presented as assets at their discounted amounts:- a
The rights are for fixed or determinable amounts.
- b
The rights are not contingent on the holder's life expectancy or the occurrence of a particular event, such as disability or death.
- c
The rights do not require future performance of service by the holder.
Paragraph
274-10-55-7 identifies nonforfeitable rights that may have the preceding characteristics.
Personal financial statements shall present payables and other liabilities at the discounted amounts of cash to be paid. The discount rate shall be the rate implicit in the transaction in which the debt was incurred. If, however, the debtor is able to discharge the debt currently at a lower amount, the debt shall be presented at the lower amount.
Noncancellable commitments to pay future sums that have all the following characteristics shall be presented as liabilities at their discounted amounts:- a
The commitments are for fixed or determinable amounts.
- b
The commitments are not contingent on others' life expectancies or the occurrence of a particular event, such as disability or death.
- c
The commitments do not require future performance of service by others.
Noncancellable commitments that may have the preceding characteristics include fixed amounts of alimony for a definite future period and charitable pledges.
The liability for income taxes payable shall include unpaid income taxes for completed tax years and an estimated amount for income taxes accrued for the elapsed portion of the current tax year to the date of the financial statements. That estimate shall be based on the relationship of taxable income earned to date to total estimated taxable income for the year, net of taxes withheld or paid with estimated income tax returns.
A provision shall be made for estimated income taxes on the differences between the estimated current values of assets and the estimated current amounts of liabilities and their tax bases, including consideration of negative tax bases of tax shelters, if any. The provision shall be computed as if the estimated current values of all assets had been realized and the estimated current amounts of all liabilities had been liquidated on the statement date, using applicable income tax laws and regulations, considering recapture provisions and available carryovers. For related implementation guidance, see paragraph
274-10-55-1.