What is an asset?
We have continued to encourage the Financial Accounting Standards Board, and the financial community in general, to embrace the idea of mark to market for marketable securities. Contrary to the perception by some, we have not been promoting mark to market for other assets, such as plant and equipment, patents and copyrights, or commercial loans held by banks. However, what the staff has done is to suggest the idea that, when one is looking to identifY impairment of the carrying amount of assets such as stocks, bonds, loans, plant, and patents, it is appropriate to look at the fair value of the asset and compare that fair value with the carryingamount of the asset. And then, when one goes to measure impairment, fair value of the asset would be the appropriate attribute to look at in order to obtain the best and most relevant measure of the impairment. This approach is consistent with the measurement of foreclosed assets and in substance foreclosed assets as announced in Financial Reporting Release 28, issued in 1 986. In that release, the commission said that market value should be used to measure foreclosed assets and in substance foreclosed assets, even in a situation where those market values come from an auction market where assets are being bought for speculative purposes.