IFRS 13

Question 1

Fair Value

Answer 1

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

Question 2

Fair Value Hierarchy

Answer 2

Level 1 : quoted prices in active markets for identical assets that the entity can access at the measurement date

Level 2: inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: inputs are unobservable inputs for the asset or liability.

Question 3

market approach

Answer 3

uses prices and other relevant information generated by market transactions involving identical or comparable (similar) assets, liabilities, or a group of assets and liabilities (e.g. a business)

Question 4

cost approach

Answer 4

reflects the amount that would be required currently to replace the service capacity of an asset (current replacement cost)

Question 5

income approach

Answer 5

converts future amounts (cash flows or income and expenses) to a single current (discounted) amount, reflecting current market expectations about those future amounts.