IFRS 13 fair value measurement

Question 1

fair value

Answer 1

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

Question 2

market based measurement

Answer 2

when determining the price at which the asset would be sold observable data from active markets should be used.

Question 3

active market

Answer 3

market where transactions for the asset or liability occur frequently

Question 4

Level 1 inputs (priority given)

Answer 4

quoted prices for identical assets in active markets

Question 5

level 2 inputs

Answer 5

observable prices that are not level 1 inputs
.quoted prices for similar assets in active markets
.quoted prices for identical assets in less active markets
.observable inputs that are not prices (eg: interest rate)

Question 6

level 3 inputs (less priority given)

Answer 6

unobservable
(includes cash or profit forecast using entity’s own data)

Question 7

principal market

Answer 7

market with the greatest activity for the asset or liability being measured

Question 8

most advantageous market

Answer 8

this market maximizes the net amount received from selling an asset and minimizes the amount paid to transfer a liability

Question 9

fair value of Non financial asset

Answer 9

the fair value of a NFA is based on its highest and best use