IFRS 13 Objective and Scope

IFRS 13 Fair value measurementIFRS 13 Objective and Scope

IFRS 13 Objective and Scope

Objective

1 This IFRS:

  1. defines fair value;
  2. sets out in a single IFRS a framework for measuring fair value; and
  3. requires disclosures about fair value measurements.

2 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 Read more

IFRS 13 Measurement fair value

IFRS 13 Fair value measurementIFRS 13 Measurement fair value

IFRS 13 Measurement fair value

Measurement

Definition of fair value

9 This IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between Read more

IFRS 13 Measurement Markets risks and Counterparty risks

IFRS 13 Fair value measurementIFRS 13 Measurement Markets risks and Counterparty risks

IFRS 13 Measurement Markets risks and Counterparty risks

Application to financial assets and financial liabilities with offsetting positions in market risks or counterparty credit risk

48 An entity that holds a group of financial assets and financial liabilities is exposed to market risks (as defined in IFRS 7) and to the credit risk (as defined in IFRS 7) of each of the counterparties. If the entity manages that group of financial assets and financial liabilities on the basis of its net exposure to either market risks or credit risk, the entity is permitted to apply an exception to this IFRS for measuring fair value. That exception permits an entity to measure the fair value of … Read more

IFRS 13 Fair value at initial recognition

IFRS 13 Fair Value MeasurementIFRS 13 Fair value at initial recognition

IFRS 13 Fair value at initial recognition

Fair value at initial recognition

57 When an asset is acquired or a liability is assumed in an exchange transaction for that asset or liability, the transaction price is the price paid to acquire the asset or received to assume the liability (an entry price). In contrast, the fair value of the asset or liability is the price that would be received to sell the asset or paid to transfer the liability (an exit 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.

58 In many cases the transaction … Read more

IFRS 13 Valuation techniques

IFRS 13 Fair Value MeasurementIFRS 13 Valuation techniques

IFRS 13 Valuation techniques

Valuation techniques

61 An entity shall use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

62 The objective of using a valuation technique is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between Read more

IFRS 13 Disclosures fair value measurement

IFRS 13 Fair Value MeasurementIFRS 13 Disclosures fair value measurement

IFRS 13 Disclosures fair value measurement

91 An entity shall disclose information that helps users of its financial statements assess both of the following:

  1. for assets and liabilities that are measured at fair value on a recurring or non-recurring basis in the statement of financial position after initial recognition, the valuation techniques and inputs used to develop those measurements.
  2. for recurring fair value measurements using significant unobservable inputs (Level 3), the effect of the measurements on profit or loss or other comprehensive income for the period.

92 To meet the objectives in paragraph 91, an entity shall consider all the following:

  1. the level of detail necessary to satisfy the disclosure requirements;
  2. how much emphasis to
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IFRS 13 Fair value measurement approach

IFRS 13 Fair Value MeasurementIFRS 13 Fair value measurement approach

IFRS 13 Fair value measurement approach

Appendix B Application guidance

This appendix is an integral part of the IFRS. It describes the application of paragraphs 1–99 and has the same authority as the other parts of the IFRS.

B1 The judgements applied in different valuation situations may be different. This appendix describes the judgements that might apply when an entity measures fair value in different valuation situations.

The fair value measurement approach

B2 The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between Read more

IFRS 13 Valuation premise Non-financial assets

IFRS 13 Fair Value MeasurementIFRS 13 Valuation premise Non-financial assets

IFRS 13 Valuation premise Non-financial assets

Appendix B Application guidance

This appendix is an integral part of the IFRS. It describes the application of paragraphs 1–99 and has the same authority as the other parts of the IFRS.

Valuation premise for non-financial assets (paragraphs 31–33)

B3 When measuring the fair value of a non-financial asset used in combination with other assets as a group (as installed or otherwise configured for use) or in combination with other assets and liabilities (eg a business), the effect of the valuation premise depends on the circumstances. For example:

  1. the fair value of the asset might be the same whether the asset is used on a stand-alone basis or in
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IFRS 13 Valuation techniques

IFRS 13 Fair Value MeasurementIFRS 13 Valuation techniques

IFRS 13 Valuation techniques

Appendix B Application guidance

This appendix is an integral part of the IFRS. It describes the application of paragraphs 1–99 and has the same authority as the other parts of the IFRS.

Valuation techniques (paragraphs 61–66)

Market approach

B5 The market approach uses prices and other relevant information generated by market transactions involving identical or comparable (ie similar) assets, liabilities or a group of assets and liabilities, such as a business.

B6 For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might be in ranges with a different multiple for each comparable. The selection of the appropriate multiple within the … Read more