Ifrs 13 Fair Value Measurement_.pptx

IFRS IFRS 13 13 Fair Value Measuremet Presented By:

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IAS 13 – Objective  Market-based measurement, not an entity-specific measurement.  FVM estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions.

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IAS 13 – Scope Applies when another IFRS requires or permits: Fair value measurements or disclosures about fair value measurements

share-based payment transactions in accordance with IFRS 2 Share-based Payment

(and (and measurements, measurements, such such as as fair fair value value less less costs costs to to sell, sell, based based on on fair fair value value or or disclosures disclosures about about those those measurements), measurements),

except

Leasing transactions in accordance with IFRS 16 Leases

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IAS 13 – Definition of Fair Value Management It is 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.

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IAS 13 – FVM Approach A fair value measurement requires an entity to determine all the following:   The The particular particular asset asset or or liability liability subject subject of of the the measurement measurement (consistently (consistently with with its its unit unit of of account) account)   For For a a non-financial non-financial asset, asset, the the valuation valuation basis basis appropriate appropriate for for the the measurement measurement (consistently (consistently with with its its highest highest and and best best use). use).   The The principal principal (or (or most most advantageous) advantageous) market market for for the the asset asset or or liability. liability.   The The valuation valuation technique(s) technique(s) appropriate appropriate for for the the measurement, measurement, considering: considering:  

The The availability availability of of data data that that market market participants participants would would use use when when pricing pricing the the asset asset or or liability liability

 

The The level level of of the the fair fair value value hierarchy hierarchy within within which which the the inputs inputs are are categorised. categorised.

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IAS 13 – Asset or Liability when when measuring measuring fair fair value value an an entity entity shall shall take take into into account account the the characteristics characteristics of of the the asset asset or or liability liability ifif market market participants participants would would take take those those characteristics characteristics into into account account when when pricing pricing the the asset asset or or liability liability at at the the measurement measurement date. date. Such Such characteristics characteristics include, include, for for example, example, the the following: following:

(a) (a) the the condition condition and and location location of of the asset; . the asset; .

(b) restrictions, ifif any, (b) restrictions, any, on on the the sale sale or or use use of of the the asset asset

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IAS 13 – Asset or Liability The The asset asset or or liability liability measured measured at at fair fair value value might might be be either either of of the the following: following:

(a) (a) A A stand-alone stand-alone asset asset or or liability liability (e.g. (e.g. a a financial financial instrument or a non-financial asset); or instrument or a non-financial asset); or (b) (b) restrictions, restrictions, ifif any, any, on on the the sale sale or or use of the asset use of the asset

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IAS 13 – The Transaction A A FVM FVM assumes assumes that that asset asset or or liability liability is is exchanged exchanged in in an an orderly orderly transactions transactions between between market market participants participants to to ::   sell sell the the asset asset or or   transfer transfer the the liability liability at at the the measurement measurement date date under under current current market market conditions. conditions.

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IAS 13 – The Transaction A A FVM FVM assumes assumes that that the the transaction transaction to to sell sell the the asset asset or or transfer transfer the the liability liability takes takes place place either: either:

(a) (a) In In the the principal principal market market for for the the asset asset or or liability; liability; or or (b) (b) in in the the most most advantageous advantageous market market for for the the asset or liability. asset or liability. (in (in the the absence absence of of a a principal principal market) market)

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IAS 13 – Market Participants   An An entity entity shall shall measure measure the the fair fair value value of of an an asset asset or or a a liability liability using using the the assumptions assumptions that that market market participants participants would would use use when when pricing pricing the the asset asset or or liability. liability.   An An entity entity assumes assumes that that market market participants participants act act in in their their economic economic best best interest. interest.

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IAS 13 – Valuation Techniques   IFRS IFRS 13 13 describes describes three three valuation valuation techniques techniques to to determiner determiner FV. FV. 1. 1.

The The market market approach approach :: An An entity entity uses uses prices prices & & other other relevant relevant information information generated generated by by market market transactions transactions involving involving identical identical or or comparable comparable assets, assets, liabilities liabilities or or a a group group of of assets assets and and liabilities. liabilities.

2. 2.

The The income income approach approach :: An An entity entity converts converts future future amounts amounts (e.g., (e.g., cash cash flows flows or or income income and and expenses) expenses) to to a a single single current current (i.e., (i.e., discounted) discounted) amount. amount.

3. 3.

The The cost cost approach approach

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IAS 13 – Premiums and Discounts   IFRS IFRS 13 13 permits permits a a premium premium or or discount discount to to be be included included in in a a fair fair value value measurement measurement only only when when itit is is consistent consistent with with the the unit unit of of account account for for the the item. item.

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IAS 13 – Disclosures   The The IFRS IFRS requires requires a a number number of of quantitative quantitative and and qualitative qualitative disclosures disclosures about about FVM. FVM.   Many Many of of these these are are related related to to the the following following three-level three-level fair fair value value hierarchy hierarchy on on the the basis basis of of the the inputs inputs to to the the valuation valuation technique technique

Level 1

Level 2

Inputs are fully observable (e.g. unadjusted

Inputs are those other than quoted prices within

quoted prices in an active market for identical

Level 1 that are directly or indirectly observable.

assets and liabilities that the entity can access at the measurement date)

Level Level 3 3 Inputs Inputs are are unobservable unobservable

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IAS 13 – Fair Value Measurement

End of IFRS 13