IFRS 13: FAIR VALUE MEASUREMENT
Market related/price
Perspective of market participants based on current market condition for a specific item.
FV = market-based measurement, rather than entity-specific item/value
• Requirements regarding measurement (R-value) of fair value and disclosure of fair value info is dispersed
across numerous standards and objectives are not clear
• Where in existing standards are references to fair value?
o IFRS 3: Assets and liabilities @ FV at acquisition
o IFRS 5: held for sale: lowest of CA and FV less costs to sell
o IAS 16: cost = FV of consideration; recoverable amount = highest of FV less costs to sell and value in use; revaluation model
(at FV)
o IAS 17: consider FV when distinguishing between operating and finance leases
o IFRS 15: Revenue = FV of consideration
o IAS 19: FV of plan assets
o IAS 21: non-monetary assets at FV in foreign currency
o IAS 32 and IFRS 9: certain financial instruments at FV
o IAS 36: recoverable amount = highest of FV less costs to sell and value in use
o IAS 38: cost = FV of consideration
o IAS 40: investment property @ cost / FV
• IFRS 13 does not determine when an asset/liability/ equity instrument should be measured at FV – other
relevant standards still determine this
• IFRS 13’s measurement and disclosure requirements only apply when another IFRS requires/allows the item to
be measured @ FV (some exceptions)
IFRS 13 therefore achieves the following:
• Reduces complexity and improves consistency in the application of FV measurement principles (now one
standard with all the necessary requirements regarding FV)
• Clearer measurement objective (definition of FV now clearer)
• Improves transparency (better disclosure of FV info)
• Converges IFRS and US GAAP (meaning of FV now the same)
Example: Co. A owns a factory which is classified as investment property i.t.o. IAS 40, since it is held to earn rental
income. The Co. chose i.t.o. IAS 40 to measure the factory @ FV. (Not CP)
- IFRS 13 provides guidance on how to determine the FV of the factory at each measurement date (in this case
at each reporting date).
- The disclosures as required by both IAS 40 and IFRS 13 should be provided.
− Objective (.01-.04) & Scope (.05-.08)
− Definition of FV (.09)
o Measurement date: in terms of the relevant/separate standard – initial recognition/reporting date
o Logically determinable
1
, 2
Market related/price
Perspective of market participants based on current market condition for a specific item.
FV = market-based measurement, rather than entity-specific item/value
• Requirements regarding measurement (R-value) of fair value and disclosure of fair value info is dispersed
across numerous standards and objectives are not clear
• Where in existing standards are references to fair value?
o IFRS 3: Assets and liabilities @ FV at acquisition
o IFRS 5: held for sale: lowest of CA and FV less costs to sell
o IAS 16: cost = FV of consideration; recoverable amount = highest of FV less costs to sell and value in use; revaluation model
(at FV)
o IAS 17: consider FV when distinguishing between operating and finance leases
o IFRS 15: Revenue = FV of consideration
o IAS 19: FV of plan assets
o IAS 21: non-monetary assets at FV in foreign currency
o IAS 32 and IFRS 9: certain financial instruments at FV
o IAS 36: recoverable amount = highest of FV less costs to sell and value in use
o IAS 38: cost = FV of consideration
o IAS 40: investment property @ cost / FV
• IFRS 13 does not determine when an asset/liability/ equity instrument should be measured at FV – other
relevant standards still determine this
• IFRS 13’s measurement and disclosure requirements only apply when another IFRS requires/allows the item to
be measured @ FV (some exceptions)
IFRS 13 therefore achieves the following:
• Reduces complexity and improves consistency in the application of FV measurement principles (now one
standard with all the necessary requirements regarding FV)
• Clearer measurement objective (definition of FV now clearer)
• Improves transparency (better disclosure of FV info)
• Converges IFRS and US GAAP (meaning of FV now the same)
Example: Co. A owns a factory which is classified as investment property i.t.o. IAS 40, since it is held to earn rental
income. The Co. chose i.t.o. IAS 40 to measure the factory @ FV. (Not CP)
- IFRS 13 provides guidance on how to determine the FV of the factory at each measurement date (in this case
at each reporting date).
- The disclosures as required by both IAS 40 and IFRS 13 should be provided.
− Objective (.01-.04) & Scope (.05-.08)
− Definition of FV (.09)
o Measurement date: in terms of the relevant/separate standard – initial recognition/reporting date
o Logically determinable
1
, 2
