Conflicting information RE: Fair Value Disclosure: Required or NOT?

Question

Elan notes say that fair value disclosure for liabilities is required under both IFRS and US GAAP.

Schweser says that firms have the "option" to disclose fair value. This is reiterated in their first practice exam (morning session #61): "...disclosing its gain or loss in market value is not required."

Curriculum says: "Most companies, as required under IFRS and U.S. GAAP, disclose the fair values of financial liabilities. The primary exception to the disclosure occurs when fair value cannot be reliably measured. Example 5 illustrates Sony’s fair value disclosures, including the fair values of long-term debt."

preceding paragraphs:

"Companies recently have been given the option to report financial liabilities at fair values. Financial liabilities reported at fair value are designated as financial liabilities at fair value through profit or loss. Even if a company does not opt to report finan- cial liabilities at fair value, the availability of fair value information in the financial statements has increased. IFRS and U.S. GAAP require fair value disclosures in the financial statements unless the carrying amount approximates fair value or the fair value cannot be reliably measured.

A company selecting the fair value option for a liability with a fixed coupon rate will report gains (losses) when market interest rates increase (decrease). When market interest rates increase or other factors cause the fair value of a company’s bonds to decline, the company reports a decrease in the fair value of its liability and a corre- sponding gain. When interest rates decrease or other factors cause the fair value of a company’s bonds to increase, the company reports an increase in the fair value of its liability and a corresponding loss. The gains or losses resulting from changes in fair values are recognised in profit or loss.

Few companies have selected the option to report financial liabilities at fair value. Those that have are primarily companies in the financial sector. Reporting standards for financial investments and derivatives already required these companies to report a significant portion of their assets at fair values. Measuring financial liabilities at other than fair value, when financial assets are measured at fair value, results in earn- ings volatility. This volatility is the result of using different bases of measurement for financial assets and financial liabilities. Goldman Sachs (NYSE:GS) elected to account for some financial liabilities at fair value under the fair value option. In its fiscal year 2008 10-K filing (page 74), Goldman explains this choice:"
 (Institute 496)
Institute, CFA. Level I 2013 Volume 3 Financial Reporting and Analysis. John Wiley & Sons P&T, 7/3/2012. VitalBook file.

I'm confused.

Sophie Macon · Answer

@imook - it's best to stick to curriculum then.

Zee Tan · Answer

@imook agree with @sophie - the curriculum is there to define the exam. Expanding on this, if there are instances where the curriculum is outdated compared to, say, latest legislations, the curriculum is still the last word on this as far as the CFA exam is concerned.