Mark to Market
Mark to Market Appraisal Services
Federal Appraisal, LLC provides “Mark to Market” Appraisal Services as required by the Government Accounting Standards Board (“GASB”) new rule, Statement 52. The rule requires state and local government endowment funds that hold land and other real estate as investments to report the asset or liability at fair value. When real estate is marked to market, for accounting purposes it is assigned the value that it would fetch in the open market. Currently, governments report such assets and liabilities at historical cost.
The rule, Statement 52, was issued on November 21, 2007 and is effective for financial-statement periods beginning after June 15, 2008. The mandate mostly affects public colleges and universities, as well as other entities that carry land and other real property as part of their endowment investments.
By reporting the endowed real estate at historical cost, governments provide investment results only in the year the holdings are sold. By using the fair-value or mark to market method, governments provide “more decision-useful information about their composition, current value, and recent changes in value,” noted the GASB in a press statement. The rule mandates that governments report changes in fair value as investment income and requires them to disclose the methods and significant assumptions used to determine that market value. Also, governments must provide investors with information about other investments booked at fair value. The “Mark to Market” Appraisal Services that Federal Appraisal, LLC provides comply with all GASB appraisal and accounting reporting requirements, as well as with the Uniform Standards of Professional Appraisal Practice (USPAP), the Appraisal Institute and the American Society of Appraisers.