Understanding the FASB's new basis project: when should a reporting entity adopt a new basis of accounting for assets and liabilities?

The Financial Accounting Standard Board released Statement no. 107, 'Disclosures About Fair Value of Financial Instruments,' which evaluates the historical cost model and when a separate balance sheet for fair value amounts is required. The new basis project evaluated circumstances when a new basis for accounting was necessary. Some of these situations are: purchasing a new business combination, leveraged buyout, legal reorganization, quasi reorganization and formation of a joint venture.