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project, the FASB issued four statements each known as a
“Statement of Financial Accounting Standards” (SFAS).
a. SFAS No. 105
In March 1990, the FASB issued SFAS No. 105, “Disclosures of
Information about Financial Instruments with Off-Balance-Sheet
Risk and Financial Instruments with Concentrations of Credit
Risk”. SFAS No. 105 required the footnote disclosure of the
extent, nature, and terms of financial instruments such as swaps
which had off-balance-sheet risk. SFAS No. 105 did not require
disclosure of the related market values.
b. SFAS No. 107
In December 1991, the FASB issued SFAS No. 107, “Disclosures
about Fair Value of Financial Instruments”, effective for fiscal
years ended after December 15, 1992. SFAS No. 107 required
footnote disclosure of the fair value of financial instruments
for which it was practicable to estimate fair value but did not
require formal recognition in the financial statements. SFAS No.
107 defined the fair value of a financial instrument as
the amount at which the instrument could be exchanged
in a current transaction between willing parties, other
than in a forced or liquidation sale. If a quoted
market price is available for an instrument, the fair
value to be disclosed for that instrument is the
product of the number of trading units of the
instrument times that market price.
SFAS No. 107 stated that the amounts computed as “market value,
current value, or mark-to-market” value under the then-existing
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