1. to define fair value
2. to set out a framework for measuring value
3. to require disclosures about fair value measurement
1.1 The price that would be received
1.2 to sell an asset or pay to transfer a liability
1.3 in an orderly transaction
1.4 between market participants
1.5 at the measurement date
the price that is received to sell an asset or paid to transfer a liability
expectations about the future cash flows
there is sufficient time and exposure to a market to allow the usual marketing activities
transaction and transport costs
incremental direct costs
the costs that would be incurred in the principal, directly attributable
would not otherwise have been incurred if the entity did not enter into that transaction
to move the asset to the principal
transaction costs are not considered to be a characteristic of the asset or liability, are applied to fair value becaue of being characteristic
2.1 The particular asset or liability
2.2 For a non-financial asset, the valuation grounds
2.3 The principal market for the asset
2.4 The valuation techniques
2.1.1 What is the unit of account (stand alone price)
2.1.2 Any restrictions on sale / transfer of asset / liability
2.1.3 Condition of the asset
2.1.4 Location of the asset
The price per unit would be expected to fall if a large volume of units were being sold as a package
1. in the principal market, or when no principle market is present
2. most advantageous market
The market with the greatest volume and level of activity for the asset or liability
net amount
reporting entity, it could be different for different companies
can access at the measurement date
1. Independent and not related of each other
2. Knowledgeable with reasonable understanding
3. Able and willing to enter into a transaction for the asset or liability
2.4.1 The market approach (market transactions / characteristics)
2.4.2 The income approach (future cashflow)
2.4.3 The cost approach (consideration to be paid)
1. The technique must be appropriate
2. Sufficient data needs to be available
3. Maximize observable inputs and minimise the use of unobservable inputs
4. Applied consistently
the market participants would use when pricing the assets or liability
Inputs that are developed using open market data
Inputs for which market data are not available and that are developed using the best information available
consistent with the characteristics of the asset or liability, exclude premiums or discounts
used to measure fair value, mid-market pricing
1. Quoted market prizes
2. Observable inputs
3. Unobservable inputs
1. Quoted prices (unadjusted)
2. in active markets
3. for identical assets or liabilities
4. that the entity can access at the measurement date
1. A market in which transactions take place with sufficient frequency and volume
2. to provide pricing information
3. on an ongoing basis
identical items, similar items
level 1 inputs, directly or indirectly observable
1. Finished goods inventory at a retail outlet
2. Building held and used
3. Cash generating unit
unobservable
1. CGU
2. Trademark
3. Accounts receivable
highest and best use of the asset
1. Physically possible
2. Legally possible
3. Financially feasible
a market participant perspective
on a stand alone basis or in combination with other assets
value in use, entity
in-use premise, market participants
transfer, measurement date, market conditions
A liability would remain outstanding and the market participant transferee would be required to fulfil the obligation
non-performance risk, the risk that an entity will not fullfill an obligation
measure fair value from the perspective of a market participant that holds the asset
measure the fair value using a valuation technique from the perspective of a market participant that owes the liability
1. The quoted price of the asset in an active market
2. The quoted price for the asset in a market that is not active
3. A valuation under a technique such as an income approach or a market approach
a valuation technique from the perspective of a market participant that owes the same liability, present value technique
an entity's own equity instruments are transferred to a market participant at the measurement date
remain outstanding, take on the rights and responsibilities
market risk, credit risk
1. The extent to which fair value is used to measure assets and liabilities
2. The valuation techniques
3. The effect of level 3 fair value measurements
the statement of financial position at the end of the period, particular circumstances
1. Policies and processes
2. Specific assets and liabilities
3. How fair value is measured
4. The likelihood that fair value could change
5. The reasons for changesin fair value between periods