IFRS 13 Flashcards
What is the Definition of fair value as an exit price?
IFRS 13.9: “…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.” -> nobody is forced, regular persons; no special relationship
What kind of measurement is fair value?
Fair Value is a market-based measurement, not an entity-specific measurement = The exit price at the measurement date is from the persepctive of a market participant.
What does Fair Value need to take into account?
shall take into account the characteristics of the asset or liability under the premise of the highest and best use, e.g., the condition and location of the asset
What is the requirement for fair value?
An orderly transaction which takes place either in the principal market or, in the absence of a principal market, in the most advantageous market.
What if quoted prices in active markets are not directly observable?
The use valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value.
The objective is to maximize the use of relevant observable inputs and to minimize the use of unobservable inputs.
What is the Fair Value Hierarchy?
Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Valuation techniques using inputs that are observable for the asset or liability, either directly or indirectly.
Level 3: Valuation techniques using unobservable inputs for the asset or liability.
!! Level 1: mark-to-market = Just taking taking price from active market.
Level 2 & §: mark-to-model = fair value estimated !!
