IFRS 13 Fair Value Measurement

Running head: COMPANY ACCOUNTING
Company Accounting
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COMPANY ACCOUNTING1
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................3
Question 3........................................................................................................................................4
Bibliography....................................................................................................................................5

COMPANY ACCOUNTING2
Question 1
a) IFRS 13 Fair Value Measurement does apply to the IFRS that states about the
requirement or permit the fair value measurement or disclosures thereby providing a
single IFRS Framework for the purpose of measurement of assets on fair value basis. The
concept of market participants, which is the basis for fair value based on the “exit price”
notion could be well explained with the help of ‘fair value hierarchy’ that is specific in
the context of market based activity rather than based on entity-specific measurement
(Sundgren, Mäki & Somoza-López, 2018). If the concept of market participants does not
apply well then the fair value measurement is excepted for cases where;
 Share Based Payment Transactions are involved.
 Lease Transactions undertaken by the company
 Measurement similar to fair value, such as net realizable value in IAS 2
 Value or Inventory in Usage.
If the Fair Value Measurement is not applicable in this case, then the entity may develop
inputs in accordance to the asset or liability at the date of measurement itself. If the assets
are well identical as compared to other tradable assets then the fair value could easily be
derived (Kenyon & Kenyon, 2016). It is important that the financial assets and liabilities
of the company are well stated in accordance with Fair Value so that the financial
position of the company can be well analyzed by investors and creditors.
b) The key assumptions that the entity would be making in the context of the market
participant in measuring the fair value would be the unobservable inputs that can be
obtained with the help of best information available, including the entity’s own data and