In another step along the pathway to fair value accounting, the Financial Accounting Standards Board issued a proposed staff position that seeks to clarify how companies should account for unrealized gains or losses on derivatives measured at fair value.

The guidance addresses a quandary regarding how companies should recognize a gain or a loss for earnings purposes when the value of a particular derivative instrument is difficult to measure based on its liquidity, its age, or both. FASB says different practices have emerged, so it issued the proposed staff position, Accounting for Unrealized Gains (Losses) Relating to Derivative Instruments Measured at ...