Fair Value

Question 1

What is the definition for Fair Value?

Answer 1

IFRS13_A

price that would be received to sell asset/paid transfer liability -> orderly transaction between market participants

Question 2

What are the FV hierarchy input Levels?

Answer 2

Level 1: #IFRS13_76
- Quoted prices
- active markets
Level 2: #IFRS13_81-82
- Other than Level 1
- can be observed directly or indirectly
- quoted price for similar assets/liability in active
- same in non-active markets
- Other observable inputs
- market-corroborated inputs
Level 3: #IFRS13_86-87
- unobservable Inputs
- used to measure FV to extent that relevant observable inputs are not available
- little market abiliy at measurement date

Question 3

What are the Valuation Techniques used for Fair Value?

Answer 3

Market approach #IFRS13_B5
- prices or other relecant info generated by market transactions involving similar assets
Cost approach #IFRS13_B8
- reflects amount required to replace asset
Income Approach #IFRS13_B10-11
- converts future amounts (eg Cashflow) to single current amount
Amortised Cost
- amount at which Financial Asset is initially recognized
- minus principle repayments
- +/- cumulative amortisation using effective interes method
- - reduction for impairment