Exit price Entry price

Exit price Entry price

IFRS 13 Definition – Exit price: The price that would be received to sell an asset or paid to transfer a liability. Exit price Entry price

IFRS 13 Definition – Entry price: The price paid to acquire an asset or received to assume a liability in an exchange transaction. Exit price Entry price

Entities do not necessarily sell assets at the prices paid to acquire them. Similarly, entities do not necessarily transfer liabilities at the prices received to assume them. The exit price for an asset or liability is conceptually different from its transaction price (an entry price). While exit and entry prices may be identical in many situations, the transaction price is not presumed to represent the fair value of an asset or liability on its initial recognition as measured in accordance with IFRS 13. Exit price Entry price

Entry price represents the perspective of buy-side: what a company would pay to acquire an asset or pay to settle a liability. Fair value was previously viewed as entry price. It is now synonym with an exit price (sell-side). Exit price reflects the standpoint of sell-side: what a company would receive if it were to sell the asset in the marketplace or paid if it were to transfer the liability. Exit price Entry price

The difference between entry prices and exit prices indicates the liquidity (financial) risk of investing in an asset. If the difference is high, then the operating risk of the asset should be lower as the value in use becomes the primary income recovery mechanism. Exit price Entry price

Fair value in IFRS 13  is the exit price in the principal market (or in the absence of a principal market, the most advantageous market in which the reporting entity would transact).

IFRS 13 fair value is exit price


Exit price

IFRS 13 24 The Price: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (ie an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.

IFRS 13 2 Objective: Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same—to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions (ie an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

IFRS 13 25 The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. Transaction costs shall be accounted for in accordance with other IFRSs. Transaction costs are not a characteristic of an asset or a liability; rather, they are specific to a transaction and will differ depending on how an entity enters into a transaction for the asset or liability.

IFRS 13 26 Transaction costs do not include transport costs. If location is a characteristic of the asset (as might be the case, for example, for a commodity), the price in the principal (or most advantageous) market shall be adjusted for the costs, if any, that would be incurred to transport the asset from its current location to that market.

Entry price

Entry price refers to the purchase price of an asset/liability that is determined based on the amount required to exchange the asset or liability in an orderly transaction between market participants. Current replacement cost of an asset is the amount an entity would have to pay to obtain another asset with identical service potential; it is therefore an entry value that reflects economic conditions at the measurement date.

Exit price Entry price

Exit price Entry price

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