Summary

Summary IFRS 13 Fair Value

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Course
Financial Accounting 379

Institution
Stellenbosch University (SUN)

Summary of IFRS 13 Fair value measurement for third year BAcc course

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Uploaded on August 26, 2020
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Written in 2019/2020
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Financial Accounting 379

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17 items

1. Summary - Interim acquisitions
2. Summary - Ifrs 13 fair value
3. Summary - Ifrs 9 financial instruments
4. Summary - Ifrs 5 non-current assets held for sale and discontinued operations
5. Summary - Ifrs 3 business combinations
6. Summary - Ias 37 intangible assets
7. Summary - Ias 32 financial instruments
8. Summary - Ias 27 & ifrs 10
9. Summary - Ias 21 foreign exchange
10. Summary - Ias 19 employee benefits
11. Summary - Ias 12 deferred tax
12. Summary - Ias 10 events after reporting period
13. Summary - Ias 8 changes in accounting estimates, accounting policy and errors
14. Summary - Ias 7 consolidated cash flow statement
15. Summary - Ias 28 associates
16. Summary - Group statements - complex groups
17. Summary - Changes in ownership
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IFRS 13: FAIR VALUE MEASUREMENT
Market related/price
Perspective of market participants based on current market condition for a specific item.
FV = market-based measurement, rather than entity-specific item/value

• Requirements regarding measurement (R-value) of fair value and disclosure of fair value info is dispersed
across numerous standards and objectives are not clear
• Where in existing standards are references to fair value?
o IFRS 3: Assets and liabilities @ FV at acquisition
o IFRS 5: held for sale: lowest of CA and FV less costs to sell
o IAS 16: cost = FV of consideration; recoverable amount = highest of FV less costs to sell and value in use; revaluation model
(at FV)
o IAS 17: consider FV when distinguishing between operating and finance leases
o IFRS 15: Revenue = FV of consideration
o IAS 19: FV of plan assets
o IAS 21: non-monetary assets at FV in foreign currency
o IAS 32 and IFRS 9: certain financial instruments at FV
o IAS 36: recoverable amount = highest of FV less costs to sell and value in use
o IAS 38: cost = FV of consideration
o IAS 40: investment property @ cost / FV
• IFRS 13 does not determine when an asset/liability/ equity instrument should be measured at FV – other
relevant standards still determine this
• IFRS 13’s measurement and disclosure requirements only apply when another IFRS requires/allows the item to
be measured @ FV (some exceptions)

IFRS 13 therefore achieves the following:
• Reduces complexity and improves consistency in the application of FV measurement principles (now one
standard with all the necessary requirements regarding FV)
• Clearer measurement objective (definition of FV now clearer)
• Improves transparency (better disclosure of FV info)
• Converges IFRS and US GAAP (meaning of FV now the same)

Example: Co. A owns a factory which is classified as investment property i.t.o. IAS 40, since it is held to earn rental
income. The Co. chose i.t.o. IAS 40 to measure the factory @ FV. (Not CP)
- IFRS 13 provides guidance on how to determine the FV of the factory at each measurement date (in this case
at each reporting date).
- The disclosures as required by both IAS 40 and IFRS 13 should be provided.

− Objective (.01-.04) & Scope (.05-.08)
− Definition of FV (.09)
o Measurement date: in terms of the relevant/separate standard – initial recognition/reporting date
o Logically determinable

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