ASC 820: Determining fair value in circumstances of reduced market liquidity or inactivity

Challenging market conditions relating, at least in part, to the COVID-19 pandemic are reminiscent of the financial markets during the global financial crisis of 2007–2008. Similar to market phenomena observed over a decade ago, the pandemic (in conjunction with certain other recent events) caused certain markets to become illiquid or even inactive (with volatility continuing as of the date of this article). While the current market environment may call into question the relevance of market pricing indicia and the applicability of fair value and mark-to-market accounting standards, as summarized in this piece, existing accounting guidance appears sufficient to address such circumstances.