What's the difference between recurring and non-recurring fair value measurements?

Question

AcadiFi · Accepted Answer

The distinction is the frequency and cause of fair value remeasurement.

**Recurring fair value** — assets/liabilities measured at fair value every reporting period as a policy choice or GAAP requirement. Examples: trading securities, AFS debt securities, derivatives, FVPL equity investments, plan assets in pension footnotes, investment properties under IAS 40 fair value model.

**Non-recurring fair value** — assets measured at fair value only when a specific triggering event occurs. Examples: (a) goodwill impairment testing — fair value of reporting unit measured only when impairment indicators exist or annual test is performed; (b) impaired long-lived assets held for use under ASC 360 — fair value measured only when undiscounted cash flows < carrying amount; (c) assets held for sale — measured at lower of carrying value or fair value less costs to sell; (d) loans held for sale transferred from held-for-investment.

Worked example: Copperleaf Regional Bank's 10-K discloses two fair value tables. Recurring: $3.2B trading portfolio (Level 1 and 2) and $840M interest rate swaps (Level 2) — remeasured every quarter. Non-recurring: $78M of impaired commercial real estate loans written down to fair value in Q3 — measured once at impairment date, not subsequently re-marked unless further impaired.

**Why it matters for disclosure**: Both tables show hierarchy classification, but recurring requires the full Level 3 rollforward. Non-recurring only requires disclosure for the period the measurement occurred.

Exam trap: fixed assets held at cost are NOT non-recurring fair value — they're at cost minus depreciation minus impairment. The 'fair value measurement' only triggers if impaired.

What's the difference between recurring and non-recurring fair value measurements?

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