【正文】 t or liability could be exchanged in a current transaction between knowledgeable, unrelated willing parties” (FASB, 2020a). As the FASB notes, “the objective of a fair value measurement is to estimate an exchange price for the asset or liability being measured in the absence of an actual transaction for that asset or liability.” Implicit in this objective is the notion that fair value is well defined so that an asset or liability’s exchange price fully captures its value. That is, the price at which an asset can be exchanged between two entities does not depend on the entities engaged in the exchange and this price also equals the valueinuse to any entity. For example, the value of a swap derivative to a bank equals the price at which it can purchase or sell that derivative, and the swap39。s value does not depend on the existing assets and liabilities on the bank’s balance sheet. For such a bank, Barth and Landsman (1995) notes that this is a strong assumption to make particularly if many of its assets and liabilities cannot readily be traded. I will return to the implications of this problem when discussing implementation of markingtomarket issues below. Applications to standard setting In the US, the FASB has issued several standards that mandate disclosure or recognition of accounting amounts using fair values. Among the most significant in terms of relevance to financial institutions are those standards that explicitly relate to financial instruments. Two important disclosure standards are Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures about fair value of financial instruments (FASB, 1991) and SFAS No. 119, Disclosure about derivative financial instruments and fair value of financial instruments (FASB, 1994). SFAS No. 107 requires disclosure of fair estimates of all recognized assets and liabilities, and as such, was the first standard that provided investors with estimates of the primary balance sheet accounts of banks, including securities, loans, deposits, and longterm debt. In addition, it was the first standard to provide a definition of fair value reflecting the FASB’s objective of obtaining quoted market prices wherever possible. SFAS No. 119 requires disclosure of fair value estimates of derivative financial instruments, including futures, forward, swap, and option contracts. It also requires disclosure of estimates of holding gains and losses for instruments that are held for trading purposes. Among the most significant fair value recognition standards the FASB has issued are SFAS No. 115, Accounting for certain investments in debt and equity securities (FASB, 1993), SFAS No. 123 (Revised), Sharebased payments (FASB, 2020), and SFAS No. 133, Accounting for derivative instruments and hedging activities (FASB, 1998). SFAS No. 115 requires recognition at fair value investments in equity and debt securities classified as held for trading or availableforsale. Fair value changes for the former appear in ine, and fair value changes for the latter are included as a ponent of accumulated other prehensive ine, ., are excluded from ine. Those debt securities classified as held to maturity continue to be recognized at amortized cost. SFAS No. 123 (Revised) requires the cost of employee stock options grants be recognized in ine using grant date fair value by amortizing the cost during the employee vesting or service period. This requirement removed election of fair value or intrinsic value cost measurement permitted under the original recognition standard, SFAS No. 123, Accounting for Stockbased Compensation (FASB, 1995). Until recently, most firms elected to measure the cost of employee stock options using intrinsic value. However, for such firms, SFAS No. 123 requires they disclose a pro forma ine number puted using a fair value cost for employee stock option grants, as well as key model inputs they use to estimate fair values. SFAS No. 133 require