IFRS 13 Final Exam With Confirmed
Responses
Why |was |there |a |need |for |a |standard |on |fair |value |measurement? |- |VERIFIED |ANSWERS |**✔Prior |
to |IFRS |13 |there |were |many |standards |that |defined |fair |value.
What |was |the |main |objective |of |IFRS |? |- |VERIFIED |ANSWERS |**✔To |define |fair |value |
To |establish |a |framework |for |measuring |fair |value
To |require |disclosures |about |fair |value |measurement
What |is |the |new |definition |of |fair |value? |- |VERIFIED |ANSWERS |**✔The |price |that |would |be |
received |to |sell |an |asset |or |paid |to |transfer |a |liability |in |an |orderly |transaction |between |market |
participants |at |the |measurement |date.
What |are |the |key |elements |of |the |term |fair |value? |- |VERIFIED |ANSWERS |**✔Use |of |an |exit |price
It |is |based |on |the |perspective |of |the |entity |that |holds |the |asset |or |liability. |
Orderly |transaction
What |is |the |exit |price? |- |VERIFIED |ANSWERS |**✔The |price |that |would |be |recieved |to |sell |an |asset |
or |paid |to |transfer |a |liability
What |is |meant |by |orderly |transaction? |- |VERIFIED |ANSWERS |**✔A |transaction |that |assumes |
exposure |to |the |market |for |a |period |before |the |measurement |date |to |allow |marketing |activities |
that |are |usual |and |customary |for |transactions |involving |assets |or |liabilities.
What |criteria |must |market |participants |meet? |- |VERIFIED |ANSWERS |**✔Must |be |independent |from
|each |other
Must |be |knowledgeable |about |the |asset |or |liability
Must |have |the |ability |to |enter |into |the |transaction |
Must |not |be |forced |or |compelled.
, What |are |transactions |costs? |- |VERIFIED |ANSWERS |**✔Costs |are |incremental |direct |costs |that |
would |not |have |been |incurred |had |the |decisions |to |sell |the |asset/transfer |the |liability |not |been |
made.
What |are |transport |costs? |- |VERIFIED |ANSWERS |**✔Costs |incurred |to |transport |an |asset |from |its |
current |location |to |its |principal |market.
How |do |transaction |and |transport |costs |affect |fair |value? |- |VERIFIED |ANSWERS |**✔They |affect |the |
determination |of |fair |value |and |are |relevant |in |determining |the |most |advantageous |market. |
The |price |used |to |measure |fair |value |is |not |adjusted |for |these |costs.
What |are |the |four |steps |to |measure |fair |value |for |a |non-financial |asset? |- |VERIFIED |ANSWERS |
**✔1.Determine |the |asset |or |liability |to |be |measured
2.Determine |the |valuation |premise |that |is |appropriate
3. |Determine |the |principal |or |most |advantageous |market
4. |Determine |the |appropriate |valuation |technique.
What |relevant |questions |should |be |used |to |determine |the |asset |or |liability |to |be |measured? |- |
VERIFIED |ANSWERS |**✔What |is |the |location |of |the |asset
What |is |the |condition |of |the |asset
Are |there |any |restrictions |on |sale |or |use |of |the |asset
Is |the |asset |or |liability |a |stand |alone |asset |or |is |it |a |group |of |assets
How |should |the |valuation |premise |that |is |appropriate |be |determined? |- |VERIFIED |ANSWERS |
**✔Fair |value |is |measured |by |considering |the |highest |and |best |use |of |an |asset. |
The |uses |must |be |physically |possible, |legally |permissible, |and |financially |possible
What |is |the |definition |of |highest |and |best |use? |- |VERIFIED |ANSWERS |**✔The |use |of |a |non-financial
|asset |by |market |participants |that |would |maximize |the |value |of |the |asset |or |the |group |of |assets |
and |liabilities |within |which |the |asset |would |be |used. |
This |is |from |the |perspective |of |the |market |participant, |not |the |holder.
Responses
Why |was |there |a |need |for |a |standard |on |fair |value |measurement? |- |VERIFIED |ANSWERS |**✔Prior |
to |IFRS |13 |there |were |many |standards |that |defined |fair |value.
What |was |the |main |objective |of |IFRS |? |- |VERIFIED |ANSWERS |**✔To |define |fair |value |
To |establish |a |framework |for |measuring |fair |value
To |require |disclosures |about |fair |value |measurement
What |is |the |new |definition |of |fair |value? |- |VERIFIED |ANSWERS |**✔The |price |that |would |be |
received |to |sell |an |asset |or |paid |to |transfer |a |liability |in |an |orderly |transaction |between |market |
participants |at |the |measurement |date.
What |are |the |key |elements |of |the |term |fair |value? |- |VERIFIED |ANSWERS |**✔Use |of |an |exit |price
It |is |based |on |the |perspective |of |the |entity |that |holds |the |asset |or |liability. |
Orderly |transaction
What |is |the |exit |price? |- |VERIFIED |ANSWERS |**✔The |price |that |would |be |recieved |to |sell |an |asset |
or |paid |to |transfer |a |liability
What |is |meant |by |orderly |transaction? |- |VERIFIED |ANSWERS |**✔A |transaction |that |assumes |
exposure |to |the |market |for |a |period |before |the |measurement |date |to |allow |marketing |activities |
that |are |usual |and |customary |for |transactions |involving |assets |or |liabilities.
What |criteria |must |market |participants |meet? |- |VERIFIED |ANSWERS |**✔Must |be |independent |from
|each |other
Must |be |knowledgeable |about |the |asset |or |liability
Must |have |the |ability |to |enter |into |the |transaction |
Must |not |be |forced |or |compelled.
, What |are |transactions |costs? |- |VERIFIED |ANSWERS |**✔Costs |are |incremental |direct |costs |that |
would |not |have |been |incurred |had |the |decisions |to |sell |the |asset/transfer |the |liability |not |been |
made.
What |are |transport |costs? |- |VERIFIED |ANSWERS |**✔Costs |incurred |to |transport |an |asset |from |its |
current |location |to |its |principal |market.
How |do |transaction |and |transport |costs |affect |fair |value? |- |VERIFIED |ANSWERS |**✔They |affect |the |
determination |of |fair |value |and |are |relevant |in |determining |the |most |advantageous |market. |
The |price |used |to |measure |fair |value |is |not |adjusted |for |these |costs.
What |are |the |four |steps |to |measure |fair |value |for |a |non-financial |asset? |- |VERIFIED |ANSWERS |
**✔1.Determine |the |asset |or |liability |to |be |measured
2.Determine |the |valuation |premise |that |is |appropriate
3. |Determine |the |principal |or |most |advantageous |market
4. |Determine |the |appropriate |valuation |technique.
What |relevant |questions |should |be |used |to |determine |the |asset |or |liability |to |be |measured? |- |
VERIFIED |ANSWERS |**✔What |is |the |location |of |the |asset
What |is |the |condition |of |the |asset
Are |there |any |restrictions |on |sale |or |use |of |the |asset
Is |the |asset |or |liability |a |stand |alone |asset |or |is |it |a |group |of |assets
How |should |the |valuation |premise |that |is |appropriate |be |determined? |- |VERIFIED |ANSWERS |
**✔Fair |value |is |measured |by |considering |the |highest |and |best |use |of |an |asset. |
The |uses |must |be |physically |possible, |legally |permissible, |and |financially |possible
What |is |the |definition |of |highest |and |best |use? |- |VERIFIED |ANSWERS |**✔The |use |of |a |non-financial
|asset |by |market |participants |that |would |maximize |the |value |of |the |asset |or |the |group |of |assets |
and |liabilities |within |which |the |asset |would |be |used. |
This |is |from |the |perspective |of |the |market |participant, |not |the |holder.
