IFRS 13 - Fair Value Mgmt

Question 1

What is the objective?

Answer 1

• Defines fair value.
• Establishes a framework for measuring fair value.
• Requires disclosures about fair value measurements.

Question 2

How is fair value defined?

Answer 2

• Market-based measurement, not entity-specific.
• Aims to estimate the price of an orderly transaction between market participants at the measurement date under current market conditions (exit price).

Question 3

What are the valuation techniques for fair value?

Answer 3

1. Observable price for identical liability/asset in active markets.
2. Different technique that maximises the use of relevant observable inputs in active markets and minimises the use of unobservable input.
3. Unobservable inputs determined based on management’s assumptions
   4.. Entity’s Inention to hold for sale or settle liability not relevant. Only based on market participant’s assumptions, including risk.

Question 4

What is the scope of IFRS 13?

Answer 4

• Applies when other IFRSs require or permit fair value measurements or disclosures.
• Excludes share-based payment transactions (IFRS 2), leasing transactions (IFRS 16), and measurements like net realizable value (IAS 2) or value in use (IAS 36).

Disclosure Exemptions:

Not required for plan assets (IAS 19), retirement benefit plan investments (IAS 26), or assets with recoverable amount as fair value less disposal costs (IAS 36).
Application:

Fair value measurement framework applies to both initial and subsequent measurements if required or permitted by other IFRSs.

Question 5

What are the measurement considerations?

Answer 5

1. Characteristics of asset or liability (if relevant to market participants).
2. Type of asset or liability measured
3. The transaction (Orderly?)
4. Access to market (Principal mrkt?)
5. Assumed transaction (In absence of market)
6. Market Participants(Assumed act in best interest)
7. Price Determination
8. Transaction costs not included in FV price.
9. Restrictions preventing transfer are implicitly or explicitly included in fair value inputs.
10. Fair value of financial liabilities with demand features is determined based on the payable amount discounted from the first possible payment date.

Question 6

What