The argument among accountants and ?nancial statement users over the proper valuation procedures for assets and liabilities resulted in the release of SFAS No. 115 (see FASB ASC 320-19). The statement requires current-value disclosures for all investments in debt securities and for investments in equity securities that have readily determinable fair values and for which the investor does not have signi?cant in?uence. The chairman of the Securities and Exchange Commission termed histor-ical cost valuations “once-upon-a-time accounting.” Historical cost accounting also has been criticized as contributing to the savings and loan crisis of the 1980s. During that period, these ?nancial institutions continued to value assets at historical cost when they were billions of dollars overvalued. Critics of current-value accounting point out that objective market values for many assets are not available, current values cannot be used for tax purposes, using current values can cause earnings volatility, and management could use current value to “manage earnings.” Required:

a. Determine how current values might be determined for investments, land, buildings, equipment, patents, copyrights, trademarks, and franchises.

b. How might the use of current values in the accounting records cause earn-ings volatility?

c. Discuss how management might manage earnings using current cost data.

d. How do the requirements originally established by SFAS No. 157 affect the use of fair value measurement in ?nancial statements?