IFRS 13 - Fair Value Measurement

Question 1

q.34- Wing Co- IFRS 13-

Effect of subsequent events on FV measurement of investment property.

Answer 1

IFRS 13 Fair Value Measurement: Emphasizes estimation of price in orderly transactions betweeen market particupants under current market conditions.

**Measurement uncertainty: ** Due to pandemic, wider range of possible fair estimates.

Wing Co’s Judgement:Requirement to find most representative fair value.

Orderly transaction requirement: Fair value determination excludes forced transactions.

Director’s intention: Irrelevant to fair value determination; fair value is market-based, not entity specific.

Market activity decrease: May result in inactive market, affecting fair value determination.

Observable prices: Must be considered from inactive markets, considered property type and location.

Question 2

Q37- Sitka -IFRS 13

FV of 2 assets on acquisition of Billing Co under FRS102 VS IFRS 13

Answer 2

• Fair value, is price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
  *** IFRS 13 introduces the concept of the highest and best use, **which refers to the utilization of a non-financial asset by market participants to maximize its value or the value of the group of assets and liabilities it belongs to.
• The fair value of assets is determined based on their highest and best use within the buyer group operating in the industry.
• In a scenario where the fair value of an asset group is compared between different buyer groups, such as industry buyers and financial investors, the fair value may vary.
• The fair value of the asset group for industry buyers may be higher due to the optimized use of assets within the group, even if it does not maximize the value of individual assets.
• For financial reporting purposes, the fair value of an asset like Qbooks may differ from its perceived value by financial investors if its use within the industry buyer group yields a different valuation. For example, Qbooks might be worth $50 million to financial investors but have a fair value of $30 million for financial reporting purposes based on industry buyer group valuation.