International Financial Reporting Standard 13 Fair Value Measurement (IFRS 13) is set out in paragraphs 1⁠–⁠99 and Appendices A⁠–⁠D. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. Terms defined in Appendix A are in italics the first time they appear in the IFRS. Definitions of other terms are given in the Glossary for International Financial Reporting Standards. IFRS 13 should be read in the context of its objective and the Basis for Conclusions, the Preface to IFRS Standards and the Conceptual Framework for Financial ReportingIAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance. [Refer:IAS 8 paragraphs 10⁠–⁠12]

International Financial Reporting Standard 13Fair Value Measurement

Objective

1

This IFRS:

(a)

defines fair value; [Refer:paragraph 9 and Appendix A]

(b)

sets out in a single IFRS a framework for measuring fair value; and

(c)

requires disclosures about fair value measurements. [Refer:paragraphs 91⁠–⁠99]

[Note:IFRS 13 explains how to measure fair value for financial reporting. It does not require fair value measurements in addition to those already required or permitted by other IFRS Standards and is not intended to establish valuation standards or affect valuation practices outside financial reporting. Refer: Basis for Conclusions paragraphs BC1⁠–⁠BC18 for background about the development of the Standard.]

2

Fair value is a market‑based measurement, not an entity‑specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same—to estimate the price at which an orderly transaction to sell the asset [Refer:Basis for Conclusions paragraph BC39] or to transfer the liability [Refer:Basis for Conclusions paragraph BC40] would take place between market participants at the measurement date under current market conditions (ie an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability). [Refer:Basis for Conclusions paragraphs BC36⁠–⁠BC45]

3

When a price for an identical asset or liability is not observable, an entity measures fair value using another valuation technique that maximises the use of relevant observable inputs and minimises the use of unobservable inputs. Because fair value is a market‑based measurement, it is measured using the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk. As a result, an entity’s intention to hold an asset or to settle or otherwise fulfil a liability is not relevant when measuring fair value.

4

The definition of fair value focuses on assets and liabilities because they are a primary subject of accounting measurement. In addition, this IFRS shall be applied to an entity’s own equity instruments measured at fair value.

Scope

5

This IFRS applies when another IFRS requires or permits fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements), except as specified in paragraphs 6 and 7.

6

The measurement and disclosure requirements of this IFRS do not apply to the following:

(a)

share‑based payment transactions within the scope of IFRS 2 Share‑based Payment; [Refer:Basis for Conclusions paragraph BC21 and IFRS 2 paragraph 2]

(b)

leasing transactions accounted for in accordance with IFRS 16 Leases; and

(c)

measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories or value in use in IAS 36 Impairment of Assets. [Refer:Basis for Conclusions paragraph BC20]

7

The disclosures required by this IFRS are not required for the following:

(a)

plan assets measured at fair value in accordance with IAS 19 Employee Benefits; [Refer:Basis for Conclusions paragraph BC23]

(b)

retirement benefit plan investments measured at fair value in accordance with IAS 26 Accounting and Reporting by Retirement Benefit Plans [Refer:Basis for Conclusions paragraph BC23]; and

(c)

assets for which recoverable amount is fair value less costs of disposal in accordance with IAS 36. [Refer:Basis for Conclusions paragraphs BC218⁠–⁠BC221]

8

The fair value measurement framework described in this IFRS applies to both initial and subsequent measurement if fair value is required or permitted by other IFRSs.

Measurement

Definition of fair value

9

This IFRS defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction [Refer:paragraphs B43 and B44] between market participants at the measurement date.

10

Paragraph B2 describes the overall fair value measurement approach.

The asset or liability

11

A fair value measurement is for a particular asset or liability [Refer:paragraph B2(a)]. Therefore, when measuring fair value an entity shall take into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Such characteristics include, for example, the following:

(a)

the condition and location of the asset; and

(b)

restrictions, if any, on the sale or use of the asset. [Refer:Illustrative Examples, examples 8 and 9]

12

The effect on the measurement arising from a particular characteristic will differ depending on how that characteristic would be taken into account by market participants.

13

The asset or liability measured at fair value might be either of the following:

(a)

a stand‑alone asset or liability (eg a financial instrument or a non‑financial asset); or

(b)

a group of assets, a group of liabilities or a group of assets and liabilities (eg a cash‑generating unit or a business).

14

Whether the asset or liability is a stand‑alone asset or liability, a group of assets, a group of liabilities or a group of assets and liabilities for recognition or disclosure purposes depends on its unit of account [Refer:Appendix A]. The unit of account for the asset or liability shall be determined in accordance with the IFRS that requires or permits the fair value measurement, except as provided in this IFRS. [Refer:paragraphs 32, 39(b), 44, 69, 80, B2(a), B4(c) and Basis for Conclusions paragraph BC77]

The transaction

15

A fair value measurement assumes that the asset or liability is exchanged in an orderly transaction [Refer:paragraphs 2, 9, 24, B43 and B44] between market participants to sell the asset or transfer the liability at the measurement date under current market conditions.

16

A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either: [Refer:Illustrative Examples, example 6]

(a)

in the principal market for the asset or liability; or

(b)

in the absence of a principal market, in the most advantageous market for the asset or liability.

17

An entity need not undertake an exhaustive search of all possible markets to identify the principal market or, in the absence of a principal market, the most advantageous market, but it shall take into account all information that is reasonably available. In the absence of evidence to the contrary, the market in which the entity would normally enter into a transaction to sell the asset or to transfer the liability is presumed to be the principal market or, in the absence of a principal market, the most advantageous market.

18

If there is a principal market for the asset or liability, the fair value measurement shall represent the price in that market (whether that price is directly observable or estimated using another valuation technique) [Refer:paragraphs 61 and 62], even if the price in a different market is potentially more advantageous at the measurement date.

19

The entity must have access to the principal (or most advantageous) market at the measurement date. Because different entities (and businesses within those entities) with different activities may have access to different markets, the principal (or most advantageous) market for the same asset or liability might be different for different entities (and businesses within those entities). Therefore, the principal (or most advantageous) market (and thus, market participants) shall be considered from the perspective of the entity, thereby allowing for differences between and among entities with different activities.

20

Although an entity must be able to access the market, the entity does not need to be able to sell the particular asset or transfer the particular liability on the measurement date to be able to measure fair value on the basis of the price in that market.

21

Even when there is no observable market to provide pricing information about the sale of an asset or the transfer of a liability at the measurement date, a fair value measurement shall assume that a transaction takes place at that date, considered from the perspective of a market participant that holds the asset or owes the liability. [Refer:paragraph 62] That assumed transaction establishes a basis for estimating the price to sell the asset or to transfer the liability.

Market participants

22

An entity shall measure the fair value of an asset or a liability using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. [Refer:paragraph B2(d)]

23

In developing those assumptions, an entity need not identify specific market participants. Rather, the entity shall identify characteristics that distinguish market participants generally, considering factors specific to all the following:

(a)

the asset or liability; [Refer:paragraphs 11 and 12]

(b)

the principal (or most advantageous) market for the asset or liability; [Refer:paragraph 16] and

(c)

market participants with whom the entity would enter into a transaction in that market.

The price

24

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (ie an exit price) regardless of whether that price is directly observable or estimated using another valuation technique [Refer:paragraphs 61 and 62].

25

The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs [Refer:Illustrative Examples, example 6]. Transaction costs shall be accounted for in accordance with other IFRSs. Transaction costs are not a characteristic of an asset or a liability; rather, they are specific to a transaction and will differ depending on how an entity enters into a transaction for the asset or liability.

26

Transaction costs do not include transport costs. If location is a characteristic of the asset (as might be the case, for example, for a commodity), the price in the principal (or most advantageous) market shall be adjusted for the costs, if any, that would be incurred to transport the asset from its current location to that market. [Refer:Illustrative Examples, example 6]

Application to non-financial assets

Highest and best use for non-financial assets

27

A fair value measurement of a non‑financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

28

The highest and best use of a non‑financial asset takes into account the use of the asset that is physically possible, legally permissible and financially feasible, as follows:

(a)

A use that is physically possible takes into account the physical characteristics of the asset that market participants [Refer:paragraphs 22 and 23] would take into account when pricing the asset (eg the location or size of a property).

(b)

A use that is legally permissible takes into account any legal restrictions on the use of the asset [Refer:Illustrative Examples, example 9] that market participants [Refer:paragraphs 22 and 23] would take into account when pricing the asset (eg the zoning regulations applicable to a property).

(c)

A use that is financially feasible takes into account whether a use of the asset that is physically possible and legally permissible generates adequate income or cash flows (taking into account the costs of converting the asset to that use) to produce an investment return that market participants would require from an investment in that asset put to that use.

29

Highest and best use is determined from the perspective of market participants, even if the entity intends a different use [Refer:Basis for Conclusions paragraph BC70]. However, an entity’s current use of a non‑financial asset is presumed to be its highest and best use unless market or other factors suggest that a different use by market participants would maximise the value of the asset. [Refer:Basis for Conclusions paragraph BC71]

30

To protect its competitive position, or for other reasons, an entity may intend not to use an acquired non‑financial asset actively or it may intend not to use the asset according to its highest and best use [Refer:Basis for Conclusions paragraph BC70]. For example, that might be the case for an acquired intangible asset that the entity plans to use defensively by preventing others from using it. [Refer:Illustrative Examples, example 3] Nevertheless, the entity shall measure the fair value of a non‑financial asset assuming its highest and best use by market participants.

Valuation premise for non-financial assets

31

The highest and best use [Refer:paragraphs 27⁠–⁠30] of a non‑financial asset establishes the valuation premise used to measure the fair value of the asset, as follows:

(a)

The highest and best use of a non‑financial asset might provide maximum value to market participants [Refer:paragraphs 22 and 23] through its use in combination with other assets as a group (as installed or otherwise configured for use) or in combination with other assets and liabilities (eg a business). [Refer:Basis for Conclusions paragraphs BC78 and BC79 and Illustrative Examples, examples 2⁠–⁠5 and 9]

(i)

If the highest and best use of the asset is to use the asset in combination with other assets or with other assets and liabilities, the fair value of the asset is the price that would be received in a current transaction to sell the asset assuming that the asset would be used with other assets or with other assets and liabilities and that those assets and liabilities (ie its complementary assets and the associated liabilities) would be available to market participants.

(ii)

Liabilities associated with the asset and with the complementary assets include liabilities that fund working capital, but do not include liabilities used to fund assets other than those within the group of assets.

(iii)

Assumptions about the highest and best use of a non‑financial asset shall be consistent for all the assets (for which highest and best use is relevant) of the group of assets or the group of assets and liabilities within which the asset would be used.

(b)

The highest and best use of a non‑financial asset might provide maximum value to market participants on a stand‑alone basis. If the highest and best use of the asset is to use it on a stand‑alone basis, the fair value of the asset is the price that would be received in a current transaction to sell the asset to market participants that would use the asset on a stand‑alone basis. [Refer:Illustrative Examples, examples 2⁠–⁠5 and 9]

32

The fair value measurement of a non‑financial asset assumes that the asset is sold consistently with the unit of account specified in other IFRSs (which may be an individual asset). [Refer:paragraph 14] That is the case even when that fair value measurement assumes that the highest and best use of the asset is to use it in combination with other assets or with other assets and liabilities because a fair value measurement assumes that the market participant already holds the complementary assets and the associated liabilities. [Refer:Basis for Conclusions paragraph BC77]

33

Paragraph B3 describes the application of the valuation premise concept for non‑financial assets.

Application to liabilities and an entity’s own equity instruments

General principles

34

A fair value measurement assumes that a financial or non‑financial liability or an entity’s own equity instrument (eg equity interests issued as consideration in a business combination) is transferred to a market participant [Refer:paragraphs 22 and 23] at the measurement date. The transfer of a liability or an entity’s own equity instrument assumes the following:

(a)

A liability would remain outstanding and the market participant transferee would be required to fulfil the obligation. The liability would not be settled with the counterparty or otherwise extinguished on the measurement date.

(b)

An entity’s own equity instrument would remain outstanding and the market participant transferee would take on the rights and responsibilities associated with the instrument. The instrument would not be cancelled or otherwise extinguished on the measurement date.

35

Even when there is no observable market to provide pricing information about the transfer of a liability or an entity’s own equity instrument (eg because contractual or other legal restrictions prevent the transfer of such items [Refer:paragraphs 45 and 46 and Basis for Conclusions paragraphs BC99 and BC100]), there might be an observable market for such items if they are held by other parties as assets (eg a corporate bond or a call option on an entity’s shares).

36

In all cases, an entity shall maximise the use of relevant observable inputs and minimise the use of unobservable inputs to meet the objective of a fair value measurement, which is to estimate the price at which an orderly transaction to transfer the liability or equity instrument would take place between market participants at the measurement date under current market conditions. [Refer:paragraphs 2 and 61]

Liabilities and equity instruments held by other parties as assets

37

When a quoted price for the transfer of an identical or a similar liability or entity’s own equity instrument is not available and the identical item is held by another party as an asset, an entity shall measure the fair value of the liability or equity instrument from the perspective of a market participant that holds the identical item as an asset at the measurement date. [Refer:Basis for Conclusions paragraphs BC86⁠–⁠BC89]

38

In such cases, an entity shall measure the fair value of the liability or equity instrument as follows:

(a)

using the quoted price [Refer:paragraphs 76 and 77 and Illustrative Examples, example 12] in an active market for the identical item held by another party as an asset, if that price is available.

(b)

if that price is not available, using other observable inputs, such as the quoted price in a market that is not active for the identical item held by another party as an asset. [Refer:paragraph 81]

(c)

if the observable prices in (a) and (b) are not available, using another valuation technique, such as:

(i)

an income approach [Refer:paragraph B10] (eg a present value technique [Refer:Illustrative Examples, examples 10, 11 and 13] that takes into account the future cash flows that a market participant would expect to receive from holding the liability or equity instrument as an asset; see paragraphs B10 and B11).

(ii)

a market approach [Refer:paragraphs B5⁠–⁠B7] (eg using quoted prices for similar liabilities or equity instruments held by other parties as assets; see paragraphs B5⁠–⁠B7 [Refer:Illustrative Examples, example 12]).

39

An entity shall adjust the quoted price [Refer:paragraph 79(c) and 83(b)] of a liability or an entity’s own equity instrument held by another party as an asset only if there are factors specific to the asset that are not applicable to the fair value measurement of the liability or equity instrument. An entity shall ensure that the price of the asset does not reflect the effect of a restriction preventing the sale of that asset [Refer:Illustrative Examples, example 8]. Some factors that may indicate that the quoted price of the asset should be adjusted include the following:

(a)

The quoted price for the asset relates to a similar (but not identical) liability or equity instrument held by another party as an asset. [Refer:paragraph 82(a) and (b)] For example, the liability or equity instrument may have a particular characteristic (eg the credit quality of the issuer) that is different from that reflected in the fair value of the similar liability or equity instrument held as an asset.

(b)

The unit of account for the asset is not the same as for the liability or equity instrument. For example, for liabilities, in some cases the price for an asset reflects a combined price for a package comprising both the amounts due from the issuer and a third‑party credit enhancement. [Refer:paragraph 44] If the unit of account for the liability is not for the combined package, the objective is to measure the fair value of the issuer’s liability, not the fair value of the combined package. Thus, in such cases, the entity would adjust the observed price for the asset to exclude the effect of the third‑party credit enhancement. [Refer:Basis for Conclusions paragraphs BC96⁠–⁠BC98]

Liabilities and equity instruments not held by other parties as assets

40

When a quoted price for the transfer of an identical or a similar liability or entity’s own equity instrument is not available and the identical item is not held by another party as an asset, an entity shall measure the fair value of the liability or equity instrument using a valuation technique from the perspective of a market participant [Refer:paragraphs 22 and 23] that owes the liability or has issued the claim on equity [Refer:Basis for Conclusions paragraph BC90].

41

For example, when applying a present value technique an entity might take into account either of the following [Refer:paragraphs B12⁠–⁠B30 and Illustrative Examples, example 11]:

(a)

the future cash outflows that a market participant [Refer:paragraphs 22 and 23] would expect to incur in fulfilling the obligation, including the compensation that a market participant would require for taking on the obligation (see paragraphs B31⁠–⁠B33 [Refer:Basis for Conclusions paragraphs BC90 and BC91]).

(b)

the amount that a market participant would receive to enter into or issue an identical liability or equity instrument, using the assumptions that market participants would use when pricing the identical item (eg having the same credit characteristics) in the principal (or most advantageous) market [Refer:paragraph 16] for issuing a liability or an equity instrument with the same contractual terms.

Non-performance risk

42

The fair value of a liability reflects the effect of non‑performance risk. Non‑performance risk includes, but may not be limited to, an entity’s own credit risk (as defined in IFRS 7 Financial Instruments: Disclosures). Non‑performance risk is assumed to be the same before and after the transfer of the liability.

43

When measuring the fair value of a liability, an entity shall take into account the effect of its credit risk (credit standing) and any other factors that might influence the likelihood that the obligation will or will not be fulfilled. That effect may differ depending on the liability, for example:

(a)

whether the liability is an obligation to deliver cash (a financial liability) or an obligation to deliver goods or services (a non‑financial liability).

(b)

the terms of credit enhancements related to the liability, if any. [Refer:paragraph 39(b)]

44

The fair value of a liability reflects the effect of non‑performance risk on the basis of its unit of account [Refer:paragraph 14]. The issuer of a liability issued with an inseparable third‑party credit enhancement [Refer:paragraph 39(b)] that is accounted for separately from the liability shall not include the effect of the credit enhancement (eg a third‑party guarantee of debt) in the fair value measurement of the liability. If the credit enhancement is accounted for separately from the liability, the issuer would take into account its own credit standing and not that of the third party guarantor when measuring the fair value of the liability. [Refer:Basis for Conclusions paragraphs BC96⁠–⁠BC98]

Restriction preventing the transfer of a liability or an entity’s own equity instrument

45

When measuring the fair value of a liability or an entity’s own equity instrument, an entity shall not include a separate input or an adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the item. The effect of a restriction that prevents the transfer of a liability or an entity’s own equity instrument is either implicitly or explicitly included in the other inputs to the fair value measurement.

46

For example, at the transaction date, both the creditor and the obligor accepted the transaction price for the liability with full knowledge that the obligation includes a restriction that prevents its transfer. As a result of the restriction being included in the transaction price, a separate input or an adjustment to an existing input is not required at the transaction date to reflect the effect of the restriction on transfer. Similarly, a separate input or an adjustment to an existing input is not required at subsequent measurement dates to reflect the effect of the restriction on transfer.

Financial liability with a demand feature

47

The fair value of a financial liability with a demand feature (eg a demand deposit) is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.E1

E1

[IFRIC® Update, May 2008, Agenda Decision, ‘IAS 37 Provisions, Contingent Liabilities and Contingent Assets—Deposits on returnable containers’

The IFRIC was asked to provide guidance on the accounting for the obligation to refund deposits on returnable containers. In some industries, entities that distribute their products in returnable containers collect a deposit for each container delivered and have an obligation to refund this deposit when containers are returned by the customer. The issue was whether the obligation should be accounted for in accordance with IAS 39 Financial Instruments: Recognition and Measurement.

The IFRIC noted that paragraph 11 of IAS 32 defines a financial instrument as ‘any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.’ Following delivery of the containers to its customers, the seller has an obligation only to refund the deposit for any returned containers.

In circumstances in which the containers are derecognised as part of the sale transaction, the obligation is an exchange of cash (the deposit) for the containers (non‑financial assets). Whether that exchange transaction occurs is at the option of the customer. Because the transaction involves the exchange of a non‑financial item, it does not meet the definition of a financial instrument in accordance with IAS 32.

In contrast, when the containers are not derecognised as part of the sale transaction, the customer’s only asset is its right to the refund. In such circumstances, the obligation meets the definition of a financial instrument in accordance with IAS 32 and is therefore within the scope of IAS 39. In particular, paragraph 49 of IAS 39 [paragraph 49 of IAS 39 is now paragraph 47 of IFRS 13 Fair Value Measurement] states that ‘the fair value of a financial liability with a demand feature (eg a demand deposit) is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.’

The IFRIC concluded that divergence in this area was unlikely to be significant and therefore decided not to add this issue to its agenda.]

Application to financial assets and financial liabilities with offsetting positions in market risks or counterparty credit risk

48

An entity that holds a group of financial assets and financial liabilities is exposed to market risks (as defined in IFRS 7) and to the credit risk (as defined in IFRS 7) of each of the counterparties. If the entity manages that group of financial assets and financial liabilities on the basis of its net exposure [Refer:paragraph 49] to either market risks or credit risk, the entity is permitted to apply an exception to this IFRS for measuring fair value. That exception permits an entity to measure the fair value of a group of financial assets and financial liabilities on the basis of the price that would be received to sell a net long position (ie an asset) for a particular risk exposure or paid to transfer a net short position (ie a liability) for a particular risk exposure in an orderly transaction [Refer:paragraphs B43 and B44] between market participants [Refer:paragraphs 22 and 23] at the measurement date under current market conditions. Accordingly, an entity shall measure the fair value of the group of financial assets and financial liabilities consistently with how market participants would price the net risk exposure at the measurement date. [Refer:paragraphs 53⁠–⁠56]

49

An entity is permitted to use the exception in paragraph 48 only if the entity does all the following: [Refer:Basis for Conclusions paragraphs BC120 and BC121]

(a)

manages the group of financial assets and financial liabilities on the basis of the entity’s net exposure to a particular market risk (or risks) or to the credit risk of a particular counterparty in accordance with the entity’s documented risk management or investment strategy;

(b)

provides information on that basis about the group of financial assets and financial liabilities to the entity’s key management personnel, as defined in IAS 24 Related Party Disclosures; and

(c)

is required or has elected to measure those financial assets and financial liabilities at fair value in the statement of financial position at the end of each reporting period.

50

The exception in paragraph 48 does not pertain to financial statement presentation. In some cases the basis for the presentation of financial instruments in the statement of financial position differs from the basis for the measurement of financial instruments, for example, if an IFRS does not require or permit financial instruments to be presented on a net basis [Refer:IAS 32 paragraphs 42⁠–⁠50]. In such cases an entity may need to allocate the portfolio‑level adjustments (see paragraphs 53⁠–⁠56) to the individual assets or liabilities that make up the group of financial assets and financial liabilities managed on the basis of the entity’s net risk exposure. An entity shall perform such allocations on a reasonable and consistent basis using a methodology appropriate in the circumstances.

51

An entity shall make an accounting policy decision in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors [Refer:IAS 8 paragraphs 7⁠–⁠29] to use the exception in paragraph 48. An entity that uses the exception shall apply that accounting policy, including its policy for allocating bid‑ask adjustments (see paragraphs 53⁠–⁠55) and credit adjustments (see paragraph 56), if applicable, consistently from period to period for a particular portfolio. [Refer:paragraph 96]

52

The exception in paragraph 48 applies only to financial assets, financial liabilities and other contracts [Refer:Basis for Conclusions BC119A and BC119B] within the scope of IFRS 9 Financial Instruments (or IAS 39 Financial Instruments: Recognition and Measurement, if IFRS 9 has not yet been adopted). [Refer:IFRS 9 paragraphs 2.1⁠–⁠2.7 and B2.1⁠–⁠B2.6] The references to financial assets and financial liabilities in paragraphs 48⁠–⁠51 and 53⁠–⁠56 should be read as applying to all contracts within the scope of, and accounted for in accordance with, IFRS 9 (or IAS 39, if IFRS 9 has not yet been adopted), regardless of whether they meet the definitions of financial assets [Refer:IAS 32 paragraph 11 (definition of a financial asset)] or financial liabilities [Refer:IAS 32 paragraph 11 (definition of a financial liability)] in IAS 32 Financial Instruments: Presentation.

Exposure to market risks

53

When using the exception in paragraph 48 to measure the fair value of a group of financial assets and financial liabilities managed on the basis of the entity’s net exposure to a particular market risk (or risks), the entity shall apply the price within the bid‑ask spread that is most representative of fair value in the circumstances to the entity’s net exposure to those market risks (see paragraphs 70 and 71).

54

When using the exception in paragraph 48, an entity shall ensure that the market risk (or risks) to which the entity is exposed within that group of financial assets and financial liabilities is substantially the same. For example, an entity would not combine the interest rate risk associated with a financial asset with the commodity price risk associated with a financial liability because doing so would not mitigate the entity’s exposure to interest rate risk or commodity price risk. When using the exception in paragraph 48, any basis risk resulting from the market risk parameters not being identical shall be taken into account in the fair value measurement of the financial assets and financial liabilities within the group.

55

Similarly, the duration of the entity’s exposure to a particular market risk (or risks) arising from the financial assets and financial liabilities shall be substantially the same. For example, an entity that uses a 12‑month futures contract against the cash flows associated with 12 months’ worth of interest rate risk exposure on a five‑year financial instrument within a group made up of only those financial assets and financial liabilities measures the fair value of the exposure to 12‑month interest rate risk on a net basis and the remaining interest rate risk exposure (ie years 2⁠–⁠5) on a gross basis.

Exposure to the credit risk of a particular counterparty

56

When using the exception in paragraph 48 to measure the fair value of a group of financial assets and financial liabilities entered into with a particular counterparty, the entity shall include the effect of the entity’s net exposure to the credit risk of that counterparty or the counterparty’s net exposure to the credit risk of the entity in the fair value measurement when market participants [Refer:paragraphs 22 and 23] would take into account any existing arrangements that mitigate credit risk exposure in the event of default (eg a master netting agreement [Refer:IAS 32 paragraph 50] with the counterparty or an agreement that requires the exchange of collateral on the basis of each party’s net exposure to the credit risk of the other party). The fair value measurement shall reflect market participants’ expectations about the likelihood that such an arrangement would be legally enforceable in the event of default.

Fair value at initial recognition

57

When an asset is acquired or a liability is assumed in an exchange transaction for that asset or liability, the transaction price is the price paid to acquire the asset or received to assume the liability (an entry price). In contrast, the fair value of the asset or liability is the price that would be received to sell the asset or paid to transfer the liability (an exit price). Entities do not necessarily sell assets at the prices paid to acquire them. Similarly, entities do not necessarily transfer liabilities at the prices received to assume them.

58

In many cases the transaction price will equal the fair value (eg that might be the case when on the transaction date the transaction to buy an asset takes place in the market in which the asset would be sold).

59

When determining whether fair value at initial recognition equals the transaction price, an entity shall take into account factors specific to the transaction and to the asset or liability. Paragraph B4 describes situations in which the transaction price might not represent the fair value of an asset or a liability at initial recognition.

60

If another IFRS requires or permits an entity to measure an asset or a liability initially at fair value and the transaction price differs from fair value, the entity shall recognise the resulting gain or loss in profit or loss unless that IFRS specifies otherwise. [Refer:Basis for Conclusions paragraph BC137]

Valuation techniques

61

An entity shall use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. [Refer:paragraphs 67 and 74]

62

The objective of using a valuation technique is to 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. [Refer:paragraph 2] Three widely used valuation techniques are the market approach, the cost approach and the income approach. The main aspects of those approaches are summarised in paragraphs B5⁠–⁠B11. An entity shall use valuation techniques consistent with one or more of those approaches to measure fair value.

Cost approach [member] Example IAS 36.130 f (ii) Disclosure
IAS 36.134 e Disclosure
IFRS 13.93 d Disclosure
823000, 995000
Income approach [member] Example IAS 36.130 f (ii) Disclosure
IAS 36.134 e Disclosure
IFRS 13.93 d Disclosure
823000, 995000
Market approach [member] Example IAS 36.130 f (ii) Disclosure
IAS 36.134 e Disclosure
IFRS 13.93 d Disclosure
823000, 995000

63

In some cases a single valuation technique will be appropriate (eg when valuing an asset or a liability using quoted prices in an active market for identical assets or liabilities). In other cases, multiple valuation techniques [Refer:Illustrative Examples, examples 4 and 5 and Basis for Conclusions paragraph BC142] will be appropriate (eg that might be the case when valuing a cash‑generating unit). If multiple valuation techniques are used to measure fair value, the results (ie respective indications of fair value) shall be evaluated considering the reasonableness of the range of values indicated by those results. A fair value measurement is the point within that range that is most representative of fair value in the circumstances. [Refer:paragraph B40]

64

If the transaction price is fair value at initial recognition [Refer:paragraphs 57⁠–⁠60 and B4] and a valuation technique that uses unobservable inputs will be used to measure fair value in subsequent periods, the valuation technique shall be calibrated so that at initial recognition the result of the valuation technique equals the transaction price. Calibration ensures that the valuation technique reflects current market conditions, and it helps an entity to determine whether an adjustment [Refer:paragraphs 69 and B39 and Basis for Conclusions paragraphs BC143⁠–⁠BC146] to the valuation technique is necessary (eg there might be a characteristic of the asset or liability [Refer:paragraph 11] that is not captured by the valuation technique). After initial recognition, when measuring fair value using a valuation technique or techniques that use unobservable inputs, an entity shall ensure that those valuation techniques reflect observable market data (eg the price for a similar asset or liability) at the measurement date.

65

Valuation techniques used to measure fair value shall be applied consistently. [Refer:paragraph B40 and Basis for Conclusions paragraph BC147] However, a change in a valuation technique or its application (eg a change in its weighting when multiple valuation techniques are used or a change in an adjustment applied to a valuation technique) is appropriate if the change results in a measurement that is equally or more representative of fair value in the circumstances. That might be the case if, for example, any of the following events take place:

(a)

new markets develop;

(b)

new information becomes available;

(c)

information previously used is no longer available;

(d)

valuation techniques improve; or

(e)

market conditions change.

66

Revisions resulting from a change in the valuation technique or its application shall be accounted for as a change in accounting estimate in accordance with IAS 8 [Refer:IAS 8 paragraphs 32⁠–⁠38 and Basis for Conclusions paragraph BC148]. However, the disclosures in IAS 8 for a change in accounting estimate [Refer:IAS 8] are not required for revisions resulting from a change in a valuation technique or its application.

Inputs to valuation techniques

General principles

67

Valuation techniques used to measure fair value shall maximise the use of relevant observable inputs and minimise the use of unobservable inputs.

68

Examples of markets in which inputs might be observable for some assets and liabilities (eg financial instruments) include exchange markets, dealer markets, brokered markets and principal‑to‑principal markets (see paragraph B34).

69

An entity shall select inputs that are consistent with the characteristics of the asset or liability that market participants would take into account in a transaction for the asset or liability (see paragraphs 11 and 12). In some cases those characteristics result in the application of an adjustment, [Refer:Basis for Conclusions paragraphs BC143⁠–⁠BC146 and BC152⁠–⁠BC159] such as a premium or discount (eg a control premium or non‑controlling interest discount). However, a fair value measurement shall not incorporate a premium or discount that is inconsistent with the unit of account in the IFRS that requires or permits the fair value measurement (see paragraphs 13 and 14). Premiums or discounts that reflect size as a characteristic of the entity’s holding (specifically, a blockage factor that adjusts the quoted price of an asset or a liability because the market’s normal daily trading volume is not sufficient to absorb the quantity held by the entity, as described in paragraph 80) rather than as a characteristic of the asset or liability (eg a control premium when measuring the fair value of a controlling interest) are not permitted in a fair value measurement. [Refer:Basis for Conclusions paragraphs BC156⁠–⁠BC157] In all cases, if there is a quoted price in an active market (ie a Level 1 input) for an asset or a liability, an entity shall use that price without adjustment when measuring fair value, except as specified in paragraph 79. [Refer:Basis for Conclusion paragraph BC168]

Inputs based on bid and ask prices

70

If an asset or a liability measured at fair value has a bid price and an ask price (eg an input from a dealer market), the price within the bid‑ask spread that is most representative of fair value in the circumstances shall be used to measure fair value regardless of where the input is categorised within the fair value hierarchy (ie Level 1, 2 or 3; see paragraphs 72⁠–⁠90). The use of bid prices for asset positions and ask prices for liability positions is permitted, but is not required.

71

This IFRS does not preclude the use of mid‑market pricing or other pricing conventions that are used by market participants as a practical expedient for fair value measurements within a bid‑ask spread.

Fair value hierarchy

72

To increase consistency and comparability in fair value measurements and related disclosures, this IFRS establishes a fair value hierarchy that categorises into three levels (see paragraphs 76⁠–⁠90) the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) [Refer:paragraphs 76⁠–⁠80 and Basis for Conclusions paragraphs BC168⁠–⁠BC170] and the lowest priority to unobservable inputs (Level 3 inputs).E2 [Refer:paragraphs 86⁠–⁠90, B36 and Basis for Conclusions paragraphs BC172⁠–⁠BC175]

E2

[IFRIC® Update, January 2015, Agenda Decision, ‘IFRS 13 Fair Value Measurement—the fair value hierarchy when third-party consensus prices are used’

The Interpretations Committee received a request to clarify under what circumstances prices that are provided by third parties would qualify as Level 1 in the fair value hierarchy in accordance with IFRS 13 Fair Value Measurement. The submitter noted that there are divergent views on the level within the hierarchy in which fair value measurements based on prices received from third parties should be classified.

The Interpretations Committee noted that when assets or liabilities are measured on the basis of prices provided by third parties, the classification of those measurements within the fair value hierarchy will depend on the evaluation of the inputs used by the third party to derive those prices, instead of on the pricing methodology used. In other words, the fair value hierarchy prioritises the inputs to valuation techniques, not the valuation techniques used to measure fair value. In accordance with IFRS 13, only unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date qualify as Level 1 inputs. Consequently, the Interpretations Committee noted that a fair value measurement that is based on prices provided by third parties may only be categorised within Level 1 of the fair value hierarchy if the measurement relies solely on unadjusted quoted prices in an active market for an identical instrument that the entity can access at the measurement date.

The Interpretations Committee also observed that the guidance in IFRS 13 relating to the classification of measurements within the fair value hierarchy is sufficient to draw an appropriate conclusion on the issue submitted.

On the basis of the analysis performed, the Interpretations Committee determined that neither an Interpretation nor an amendment to a Standard was necessary. Consequently, the Interpretations Committee decided not to add this issue to its agenda.]

73

In some cases, the inputs used to measure the fair value of an asset or a liability might be categorised within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. Assessing the significance of a particular input to the entire measurement requires judgement, taking into account factors specific to the asset or liability. Adjustments to arrive at measurements based on fair value, such as costs to sell when measuring fair value less costs to sell, shall not be taken into account when determining the level of the fair value hierarchy within which a fair value measurement is categorised.

74

The availability of relevant inputs and their relative subjectivity might affect the selection of appropriate valuation techniques (see paragraph 61). However, the fair value hierarchy prioritises the inputs to valuation techniques, not the valuation techniques used to measure fair value. For example, a fair value measurement developed using a present value technique [Refer:paragraphs B12⁠–⁠B30] might be categorised within Level 2 [Refer:paragraphs 81⁠–⁠85, B35 and Basis for Conclusions paragraph BC171] or Level 3, depending on the inputs that are significant to the entire measurement and the level of the fair value hierarchy within which those inputs are categorised.

75

If an observable input requires an adjustment using an unobservable input and that adjustment results in a significantly higher or lower fair value measurement, the resulting measurement would be categorised within Level 3 of the fair value hierarchy. For example, if a market participant would take into account the effect of a restriction on the sale of an asset [Refer:paragraph 11(b) and Illustrative Examples, example 8] when estimating the price for the asset [Refer:paragraph 12], an entity would adjust the quoted price to reflect the effect of that restriction. If that quoted price is a Level 2 input and the adjustment [Refer:paragraph B39] is an unobservable input that is significant to the entire measurement, the measurement would be categorised within Level 3 of the fair value hierarchy.

Level 1 inputs

76

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

77

A quoted price in an active market [Refer:Basis for Conclusions paragraph BC169] provides the most reliable evidence of fair value and shall be used without adjustment to measure fair value whenever available, except as specified in paragraph 79. [Refer:Basis for Conclusions paragraph BC168]

78

A Level 1 input will be available for many financial assets and financial liabilities, some of which might be exchanged in multiple active markets (eg on different exchanges). Therefore, the emphasis within Level 1 is on determining both of the following:

(a)

the principal market [Refer:Illustrative Examples, example 6] for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability [Refer:paragraph 16]; and

(b)

whether the entity can enter into a transaction for the asset or liability at the price in that market at the measurement date. [Refer:paragraphs 19 and 20]

79

An entity shall not make an adjustment to a Level 1 input except in the following circumstances:

(a)

when an entity holds a large number of similar (but not identical) assets or liabilities (eg debt securities) that are measured at fair value and a quoted price in an active market is available but not readily accessible for each of those assets or liabilities individually (ie given the large number of similar assets or liabilities held by the entity, it would be difficult to obtain pricing information for each individual asset or liability at the measurement date). In that case, as a practical expedient, an entity may measure fair value using an alternative pricing method that does not rely exclusively on quoted prices (eg matrix pricing). However, the use of an alternative pricing method results in a fair value measurement categorised within a lower level of the fair value hierarchy.

(b)

when a quoted price in an active market does not represent fair value at the measurement date. That might be the case if, for example, significant events (such as transactions in a principal‑to‑principal market, trades in a brokered market or announcements) take place after the close of a market but before the measurement date. An entity shall establish and consistently apply a policy for identifying those events that might affect fair value measurements. However, if the quoted price is adjusted for new information, the adjustment results in a fair value measurement categorised within a lower level of the fair value hierarchy.

[Refer:paragraphs 73 and 75]

(c)

when measuring the fair value of a liability or an entity’s own equity instrument using the quoted price for the identical item traded as an asset in an active market and that price needs to be adjusted for factors specific to the item or the asset (see paragraph 39). If no adjustment to the quoted price of the asset is required, the result is a fair value measurement categorised within Level 1 of the fair value hierarchy. However, any adjustment to the quoted price of the asset results in a fair value measurement categorised within a lower level of the fair value hierarchy.

80

If an entity holds a position in a single asset or liability (including a position comprising a large number of identical assets or liabilities, such as a holding of financial instruments) and the asset or liability is traded in an active market, the fair value of the asset or liability shall be measured within Level 1 as the product of the quoted price for the individual asset or liability and the quantity held by the entity. That is the case even if a market’s normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the position in a single transaction might affect the quoted price. [Refer:paragraph 69 and Basis for Conclusions paragraph BC155]

Level 2 inputs

81

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

82

If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include the following: [Refer:paragraph B35]

(a)

quoted prices for similar assets or liabilities in active markets.

(b)

quoted prices for identical or similar assets or liabilities in markets that are not active.

(c)

inputs other than quoted prices that are observable for the asset or liability, for example:

(i)

interest rates and yield curves observable at commonly quoted intervals;

(ii)

implied volatilities; and

(iii)

credit spreads.

(d)

market‑corroborated inputs. [Refer:Basis for Conclusions paragraph BC171]

83

Adjustments to Level 2 inputs will vary depending on factors specific to the asset or liability [Refer:paragraph B35]. Those factors include the following:

(a)

the condition or location of the asset; [Refer:paragraph 11(a)]

(b)

the extent to which inputs relate to items that are comparable to the asset or liability (including those factors described in paragraph 39); and [Refer:paragraph B38 and Illustrative Examples, example 4]

(c)

the volume or level of activity in the markets within which the inputs are observed. [Refer:paragraphs B37 and B38]

84

An adjustment to a Level 2 input that is significant to the entire measurement might result in a fair value measurement categorised within Level 3 of the fair value hierarchy if the adjustment uses significant unobservable inputs.

85

Paragraph B35 describes the use of Level 2 inputs for particular assets and liabilities.

Level 3 inputs

86

Level 3 inputs are unobservable inputs for the asset or liability.

87

Unobservable inputs shall be used to measure fair value to the extent that relevant observable inputs are not available, [Refer:paragraph 67] thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement objective [Refer:paragraph 2] remains the same, ie an exit price at the measurement date from the perspective of a market participant [Refer:paragraphs 22 and 23] that holds the asset or owes the liability. Therefore, unobservable inputs shall reflect the assumptions that market participants would use when pricing the asset or liability, including assumptions about risk.

88

Assumptions about risk include the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model) and the risk inherent in the inputs to the valuation technique. A measurement that does not include an adjustment for risk would not represent a fair value measurement if market participants would include one when pricing the asset or liability. For example, it might be necessary to include a risk adjustment when there is significant measurement uncertainty (eg when there has been a significant decrease in the volume or level of activity when compared with normal market activity for the asset or liability, or similar assets or liabilities, and the entity has determined that the transaction price or quoted price does not represent fair value, as described in paragraphs B37⁠–⁠B47). [Refer:Basis for Conclusions paragraphs BC143⁠–⁠BC146, BC149 and BC150]

89

An entity shall develop unobservable inputs using the best information available in the circumstances, which might include the entity’s own data. In developing unobservable inputs, an entity may begin with its own data, but it shall adjust those data if reasonably available information indicates that other market participants [Refer:paragraphs 22 and 23] would use different data or there is something particular to the entity that is not available to other market participants (eg an entity‑specific synergy). [Refer:Basis for Conclusions paragraph BC174] An entity need not undertake exhaustive efforts to obtain information about market participant assumptions. [Refer:Basis for Conclusions paragraph BC175] However, an entity shall take into account all information about market participant assumptions that is reasonably available. Unobservable inputs developed in the manner described above are considered market participant assumptions and meet the objective of a fair value measurement.

90

Paragraph B36 describes the use of Level 3 inputs for particular assets and liabilities.

Disclosure

Disclosure of fair value measurement [text block] Disclosure Text block 800500, 823000

91

An entity shall disclose information that helps users of its financial statements assess both of the following: [Refer:Basis for Conclusions paragraph BC185]

(a)

for assets and liabilities that are measured at fair value on a recurring or non‑recurring basis [Refer:Basis for Conclusions paragraph BC186] in the statement of financial position after initial recognition, the valuation techniques [Refer:paragraphs 62 and B5⁠–⁠B11] and inputs [Refer:paragraph 67] used to develop those measurements.

(b)

for recurring fair value measurements using significant unobservable inputs (Level 3), [Refer:paragraph 86] the effect of the measurements on profit or loss or other comprehensive income for the period.

92

To meet the objectives in paragraph 91, an entity shall consider all the following: [Refer:Illustrative Examples, example 17]

(a)

the level of detail necessary to satisfy the disclosure requirements;

(b)

how much emphasis to place on each of the various requirements;

(c)

how much aggregation or disaggregation to undertake; [Refer:paragraph 94] and

(d)

whether users of financial statements need additional information to evaluate the quantitative information disclosed.

If the disclosures provided in accordance with this IFRS and other IFRSs are insufficient to meet the objectives in paragraph 91, an entity shall disclose additional information necessary to meet those objectives.

Description of how third-party information was taken into account when measuring fair value, assets Example Text IFRS 13.IE64 b Example 823000
Description of how third-party information was taken into account when measuring fair value, entity's own equity instruments Example Text IFRS 13.IE64 b Example 823000
Description of how third-party information was taken into account when measuring fair value, liabilities Example Text IFRS 13.IE64 b Example 823000
Description of nature of class of assets measured at fair value Example Text IFRS 13.IE64 a Example 823000
Description of nature of class of entity's own equity instruments measured at fair value Example Text IFRS 13.IE64 a Example 823000
Description of nature of class of liabilities measured at fair value Example Text IFRS 13.IE64 a Example 823000

93

To meet the objectives in paragraph 91, an entity shall disclose, at a minimum, the following information for each class of assets and liabilities (see paragraph 94 for information on determining appropriate classes of assets and liabilities) measured at fair value (including measurements based on fair value within the scope of this IFRS) in the statement of financial position after initial recognition:

(a)

for recurring and non‑recurring [Refer:Basis for Conclusions paragraph BC186] fair value measurements, the fair value measurement at the end of the reporting period, and for non‑recurring fair value measurements, the reasons for the measurement. [Refer:Illustrative Examples, example 15] Recurring fair value measurements of assets or liabilities are those that other IFRSs require or permit in the statement of financial position at the end of each reporting period. Non‑recurring fair value measurements of assets or liabilities are those that other IFRSs require or permit in the statement of financial position in particular circumstances (eg when an entity measures an asset held for sale at fair value less costs to sell in accordance with IFRS 5 Non‑current Assets Held for Sale and Discontinued Operations because the asset’s fair value less costs to sell is lower than its carrying amount). [Refer:IFRS 5 paragraph 15]

Assets Disclosure MonetaryInstant, Debit IAS 1.55 Disclosure
IFRS 13.93 b Disclosure
IFRS 13.93 e Disclosure
IFRS 8.23 Disclosure
IFRS 8.28 c Disclosure
210000, 220000, 800100, 823000, 871100
At fair value [member] Disclosure IAS 40.32A Disclosure
IAS 41.50 Disclosure
IFRS 12.21 b (i) Disclosure
823000, 824180, 825100, 995000
Description of reasons for fair value measurement, assets Disclosure Text 823000
Description of reasons for fair value measurement, entity's own equity instruments Disclosure Text 823000
Description of reasons for fair value measurement, liabilities Disclosure Text 823000
Equity Disclosure MonetaryInstant, Credit IAS 1.55 Disclosure
IAS 1.78 e Disclosure
IFRS 1.24 a Disclosure
IFRS 1.32 a (i) Disclosure
IFRS 13.93 b Disclosure
IFRS 13.93 e Disclosure
210000, 220000, 610000, 819100, 823000
Liabilities Disclosure MonetaryInstant, Credit IAS 1.55 Disclosure
IFRS 13.93 b Disclosure
IFRS 13.93 e Disclosure
IFRS 8.23 Disclosure
IFRS 8.28 d Disclosure
210000, 220000, 800100, 823000, 871100
Measurement [axis] Disclosure IAS 40.32A Disclosure
IAS 41.50 Disclosure
823000, 824180, 825100, 990000
Measurement [domain] Disclosure IAS 40.32A Disclosure
IAS 41.50 Disclosure
823000, 824180, 825100, 990000
Non-recurring fair value measurement [member] Disclosure 823000
Recurring fair value measurement [member] Disclosure 823000

(b)

for recurring and non‑recurring fair value measurements, the level of the fair value hierarchy within which the fair value measurements are categorised in their entirety (Level 1, 2 or 3). [Refer:Illustrative Examples, example 15]

Assets Disclosure MonetaryInstant, Debit IAS 1.55 Disclosure
IFRS 13.93 a Disclosure
IFRS 13.93 e Disclosure
IFRS 8.23 Disclosure
IFRS 8.28 c Disclosure
210000, 220000, 800100, 823000, 871100
Equity Disclosure MonetaryInstant, Credit IAS 1.55 Disclosure
IAS 1.78 e Disclosure
IFRS 1.24 a Disclosure
IFRS 1.32 a (i) Disclosure
IFRS 13.93 a Disclosure
IFRS 13.93 e Disclosure
210000, 220000, 610000, 819100, 823000
Level 1 of fair value hierarchy [member] Disclosure IAS 19.142 Disclosure
IAS 36.130 f (i) Disclosure
IAS 36.134 e (iiA) Disclosure
823000, 834480, 995000
Level 2 of fair value hierarchy [member] Disclosure IAS 36.130 f (i) Disclosure
IAS 36.134 e (iiA) Disclosure
823000, 995000
Level 3 of fair value hierarchy [member] Disclosure IAS 36.130 f (i) Disclosure
IAS 36.134 e (iiA) Disclosure
823000, 995000
Levels of fair value hierarchy [axis] Disclosure IAS 19.142 Disclosure 823000, 834480, 990000
Levels of fair value hierarchy [domain] Disclosure IAS 19.142 Disclosure 823000, 834480, 990000
Liabilities Disclosure MonetaryInstant, Credit IAS 1.55 Disclosure
IFRS 13.93 a Disclosure
IFRS 13.93 e Disclosure
IFRS 8.23 Disclosure
IFRS 8.28 d Disclosure
210000, 220000, 800100, 823000, 871100

(c)

for assets and liabilities held at the end of the reporting period that are measured at fair value on a recurring basis, the amounts of any transfers between Level 1 and Level 2 of the fair value hierarchy, the reasons for those transfers and the entity’s policy for determining when transfers between levels are deemed to have occurred (see paragraph 95). Transfers into each level shall be disclosed and discussed separately from transfers out of each level. [Refer:Basis for Conclusions paragraphs BC211 and BC212]

Description of policy for determining when transfers between levels are deemed to have occurred, assets Disclosure Text IFRS 13.93 e (iv) Disclosure
IFRS 13.95 Disclosure
823000
Description of policy for determining when transfers between levels are deemed to have occurred, entity's own equity instruments Disclosure Text IFRS 13.93 e (iv) Disclosure
IFRS 13.95 Disclosure
823000
Description of policy for determining when transfers between levels are deemed to have occurred, liabilities Disclosure Text IFRS 13.93 e (iv) Disclosure
IFRS 13.95 Disclosure
823000
Description of reasons for transfers out of Level 1 into Level 2 of fair value hierarchy, assets Disclosure Text 823000
Description of reasons for transfers out of Level 1 into Level 2 of fair value hierarchy, entity's own equity instruments Disclosure Text 823000
Description of reasons for transfers out of Level 1 into Level 2 of fair value hierarchy, liabilities Disclosure Text 823000
Description of reasons for transfers out of Level 2 into Level 1 of fair value hierarchy, assets Disclosure Text 823000
Description of reasons for transfers out of Level 2 into Level 1 of fair value hierarchy, entity's own equity instruments Disclosure Text 823000
Description of reasons for transfers out of Level 2 into Level 1 of fair value hierarchy, liabilities Disclosure Text 823000
Transfers out of Level 1 into Level 2 of fair value hierarchy, assets held at end of reporting period Disclosure MonetaryDuration 823000
Transfers out of Level 1 into Level 2 of fair value hierarchy, entity's own equity instruments held at end of reporting period Disclosure MonetaryDuration 823000
Transfers out of Level 1 into Level 2 of fair value hierarchy, liabilities held at end of reporting period Disclosure MonetaryDuration 823000
Transfers out of Level 2 into Level 1 of fair value hierarchy, assets held at end of reporting period Disclosure MonetaryDuration 823000
Transfers out of Level 2 into Level 1 of fair value hierarchy, entity's own equity instruments held at end of reporting period Disclosure MonetaryDuration 823000
Transfers out of Level 2 into Level 1 of fair value hierarchy, liabilities held at end of reporting period Disclosure MonetaryDuration 823000
Statement that there were no transfers between Level 1 and Level 2 of fair value hierarchy, assets Common practice Text 823000
Statement that there were no transfers between Level 1 and Level 2 of fair value hierarchy, entity's own equity instruments Common practice Text 823000
Statement that there were no transfers between Level 1 and Level 2 of fair value hierarchy, liabilities Common practice Text 823000
Statement that there were no transfers between Level 1, Level 2 or Level 3 of fair value hierarchy, assets Common practice Text IFRS 13.93 e (iv) Common practice 823000
Statement that there were no transfers between Level 1, Level 2 or Level 3 of fair value hierarchy, entity's own equity instruments Common practice Text IFRS 13.93 e (iv) Common practice 823000
Statement that there were no transfers between Level 1, Level 2 or Level 3 of fair value hierarchy, liabilities Common practice Text IFRS 13.93 e (iv) Common practice 823000

(d)

for recurring and non‑recurring fair value measurements categorised within Level 2 and Level 3 of the fair value hierarchy, a description of the valuation technique(s) and the inputs used in the fair value measurement. If there has been a change in valuation technique [Refer:paragraph 65] (eg changing from a market approach [Refer:paragraphs B5⁠–⁠B7] to an income approach [Refer:paragraphs B10 and B11] or the use of an additional valuation technique), the entity shall disclose that change and the reason(s) for making it. For fair value measurements categorised within Level 3 of the fair value hierarchy, an entity shall provide quantitative information about the significant unobservable inputs used in the fair value measurement. [Refer:Basis for Conclusions paragraphs BC188⁠–⁠BC193 and Illustrative Examples, example 17] An entity is not required to create quantitative information to comply with this disclosure requirement if quantitative unobservable inputs are not developed by the entity when measuring fair value (eg when an entity uses prices from prior transactions or third‑party pricing information without adjustment). [Refer:Basis for Conclusions paragraph BC195] However, when providing this disclosure an entity cannot ignore quantitative unobservable inputs that are significant to the fair value measurement and are reasonably available to the entity. [Refer:paragraph B40 and Illustrative Examples, example 17]

Capitalisation rate, measurement input [member] Example IFRS 13.IE63 Example 823000
Constant prepayment rate, measurement input [member] Example IFRS 13.IE63 Example 823000
Net asset value [member] Example IFRS 13.IE63 Example 823000
Probability of default, measurement input [member] Example IFRS 13.IE63 Example 823000
Revenue multiple, measurement input [member] Example IFRS 13.IE63 Example 823000
Weighted average cost of capital, measurement input [member] Example IFRS 13.IE63 Example 823000
Cost approach [member] Disclosure IAS 36.130 f (ii) Disclosure
IAS 36.134 e Disclosure
IFRS 13.62 Example
823000, 995000
Description of change in valuation technique used in fair value measurement, assets Disclosure Text 823000
Description of change in valuation technique used in fair value measurement, entity's own equity instruments Disclosure Text 823000
Description of change in valuation technique used in fair value measurement, liabilities Disclosure Text 823000
Description of inputs used in fair value measurement, assets Disclosure Text 823000
Description of inputs used in fair value measurement, entity's own equity instruments Disclosure Text 823000
Description of inputs used in fair value measurement, liabilities Disclosure Text 823000
Description of reasons for change in valuation technique used in fair value measurement, assets Disclosure Text 823000
Description of reasons for change in valuation technique used in fair value measurement, entity's own equity instruments Disclosure Text 823000
Description of reasons for change in valuation technique used in fair value measurement, liabilities Disclosure Text 823000
Description of valuation techniques used in fair value measurement, assets Disclosure Text 823000
Description of valuation techniques used in fair value measurement, entity's own equity instruments Disclosure Text 823000
Description of valuation techniques used in fair value measurement, liabilities Disclosure Text 823000
Disclosure of significant unobservable inputs used in fair value measurement of assets [table] Disclosure 823000
Disclosure of significant unobservable inputs used in fair value measurement of assets [text block] Disclosure Text block 823000
Disclosure of significant unobservable inputs used in fair value measurement of equity [table] Disclosure 823000
Disclosure of significant unobservable inputs used in fair value measurement of equity [text block] Disclosure Text block 823000
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [table] Disclosure 823000
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [text block] Disclosure Text block 823000
Income approach [member] Disclosure IAS 36.130 f (ii) Disclosure
IAS 36.134 e Disclosure
IFRS 13.62 Example
823000, 995000
Market approach [member] Disclosure IAS 36.130 f (ii) Disclosure
IAS 36.134 e Disclosure
IFRS 13.62 Example
823000, 995000
Significant unobservable input, assets Disclosure Decimal 823000
Significant unobservable input, entity's own equity instruments Disclosure Decimal 823000
Significant unobservable input, liabilities Disclosure Decimal 823000
Unobservable inputs [axis] Disclosure IFRS 13.93 h Common practice 823000, 990000
Unobservable inputs [domain] Disclosure IFRS 13.93 h Common practice 823000, 990000
Valuation approach [domain] Disclosure IAS 36.130 f (ii) Disclosure
IAS 36.134 e Disclosure
995000
Valuation techniques used in fair value measurement [axis] Disclosure 823000, 990000
Valuation techniques used in fair value measurement [domain] Disclosure 823000, 990000
Valuation techniques used in fair value measurement, assets Disclosure List 823000
Valuation techniques used in fair value measurement, entity's own equity instruments Disclosure List 823000
Valuation techniques used in fair value measurement, liabilities Disclosure List 823000
Credit spread, measurement input [member] Common practice 823000
Discount rate, measurement input [member] Common practice 823000
Income capitalisation [member] Common practice 823000
Rent, measurement input [member] Common practice 823000

(e)

for recurring fair value measurements categorised within Level 3 of the fair value hierarchy, a reconciliation from the opening balances to the closing balances, disclosing separately changes during the period attributable to the following: [Refer:Illustrative Examples, example 16]

(i)

total gains or losses for the period recognised in profit or loss, and the line item(s) in profit or loss in which those gains or losses are recognised.

Description of line items in profit or loss where gains (losses) are recognised, fair value measurement, assets Disclosure Text 823000
Description of line items in profit or loss where gains (losses) are recognised, fair value measurement, entity's own equity instruments Disclosure Text 823000
Description of line items in profit or loss where gains (losses) are recognised, fair value measurement, liabilities Disclosure Text 823000
Gains (losses) recognised in profit or loss including exchange differences, fair value measurement, assets Disclosure MonetaryDuration 823000
Gains (losses) recognised in profit or loss including exchange differences, fair value measurement, entity's own equity instruments Disclosure MonetaryDuration 823000
Gains (losses) recognised in profit or loss including exchange differences, fair value measurement, liabilities Disclosure MonetaryDuration 823000
Gains (losses) recognised in profit or loss excluding exchange differences, fair value measurement, assets Common practice MonetaryDuration 823000
Gains (losses) recognised in profit or loss excluding exchange differences, fair value measurement, entity's own equity instruments Common practice MonetaryDuration 823000
Gains (losses) recognised in profit or loss excluding exchange differences, fair value measurement, liabilities Common practice MonetaryDuration 823000
Gains (losses) recognised in profit or loss on exchange differences, fair value measurement, assets Common practice MonetaryDuration 823000
Gains (losses) recognised in profit or loss on exchange differences, fair value measurement, entity's own equity instruments Common practice MonetaryDuration 823000
Gains (losses) recognised in profit or loss on exchange differences, fair value measurement, liabilities Common practice MonetaryDuration 823000

(ii)

total gains or losses for the period recognised in other comprehensive income, and the line item(s) in other comprehensive income in which those gains or losses are recognised.

Description of line items in other comprehensive income where gains (losses) are recognised, fair value measurement, assets Disclosure Text 823000
Description of line items in other comprehensive income where gains (losses) are recognised, fair value measurement, entity's own equity instruments Disclosure Text 823000
Description of line items in other comprehensive income where gains (losses) are recognised, fair value measurement, liabilities Disclosure Text 823000
Gains (losses) recognised in other comprehensive income including exchange differences, fair value measurement, assets Disclosure MonetaryDuration 823000
Gains (losses) recognised in other comprehensive income including exchange differences, fair value measurement, entity's own equity instruments Disclosure MonetaryDuration 823000
Gains (losses) recognised in other comprehensive income including exchange differences, fair value measurement, liabilities Disclosure MonetaryDuration 823000
Gains (losses) recognised in other comprehensive income excluding exchange differences, fair value measurement, assets Common practice MonetaryDuration 823000
Gains (losses) recognised in other comprehensive income excluding exchange differences, fair value measurement, entity's own equity instruments Common practice MonetaryDuration 823000
Gains (losses) recognised in other comprehensive income excluding exchange differences, fair value measurement, liabilities Common practice MonetaryDuration 823000
Gains (losses) recognised in other comprehensive income on exchange differences, fair value measurement, assets Common practice MonetaryDuration 823000
Gains (losses) recognised in other comprehensive income on exchange differences, fair value measurement, entity's own equity instruments Common practice MonetaryDuration 823000
Gains (losses) recognised in other comprehensive income on exchange differences, fair value measurement, liabilities Common practice MonetaryDuration 823000

(iii)

purchases, sales, issues and settlements (each of those types of changes disclosed separately).

Issues, fair value measurement, assets Disclosure MonetaryDuration, Debit 823000
Issues, fair value measurement, entity's own equity instruments Disclosure MonetaryDuration, Credit 823000
Issues, fair value measurement, liabilities Disclosure MonetaryDuration, Credit 823000
Purchases, fair value measurement, assets Disclosure MonetaryDuration, Debit 823000
Purchases, fair value measurement, entity's own equity instruments Disclosure MonetaryDuration, Credit 823000
Purchases, fair value measurement, liabilities Disclosure MonetaryDuration, Credit 823000
Sales, fair value measurement, assets Disclosure MonetaryDuration, Credit 823000
Sales, fair value measurement, entity's own equity instruments Disclosure MonetaryDuration, Debit 823000
Sales, fair value measurement, liabilities Disclosure MonetaryDuration, Debit 823000
Settlements, fair value measurement, assets Disclosure MonetaryDuration, Credit 823000
Settlements, fair value measurement, entity's own equity instruments Disclosure MonetaryDuration, Debit 823000
Settlements, fair value measurement, liabilities Disclosure MonetaryDuration, Debit 823000

(iv)

the amounts of any transfers into or out of Level 3 of the fair value hierarchy, the reasons for those transfers and the entity’s policy for determining when transfers between levels are deemed to have occurred (see paragraph 95). Transfers into Level 3 shall be disclosed and discussed separately from transfers out of Level 3.

Description of policy for determining when transfers between levels are deemed to have occurred, assets Disclosure Text IFRS 13.93 c Disclosure
IFRS 13.95 Disclosure
823000
Description of policy for determining when transfers between levels are deemed to have occurred, entity's own equity instruments Disclosure Text IFRS 13.93 c Disclosure
IFRS 13.95 Disclosure
823000
Description of policy for determining when transfers between levels are deemed to have occurred, liabilities Disclosure Text IFRS 13.93 c Disclosure
IFRS 13.95 Disclosure
823000
Description of reasons for transfers into Level 3 of fair value hierarchy, assets Disclosure Text 823000
Description of reasons for transfers into Level 3 of fair value hierarchy, entity's own equity instruments Disclosure Text 823000
Description of reasons for transfers into Level 3 of fair value hierarchy, liabilities Disclosure Text 823000
Description of reasons for transfers out of Level 3 of fair value hierarchy, assets Disclosure Text 823000
Description of reasons for transfers out of Level 3 of fair value hierarchy, entity's own equity instruments Disclosure Text 823000
Description of reasons for transfers out of Level 3 of fair value hierarchy, liabilities Disclosure Text 823000
Transfers into Level 3 of fair value hierarchy, assets Disclosure MonetaryDuration, Debit 823000
Transfers into Level 3 of fair value hierarchy, entity's own equity instruments Disclosure MonetaryDuration, Credit 823000
Transfers into Level 3 of fair value hierarchy, liabilities Disclosure MonetaryDuration, Credit 823000
Transfers out of Level 3 of fair value hierarchy, assets Disclosure MonetaryDuration, Credit 823000
Transfers out of Level 3 of fair value hierarchy, entity's own equity instruments Disclosure MonetaryDuration, Debit 823000
Transfers out of Level 3 of fair value hierarchy, liabilities Disclosure MonetaryDuration, Debit 823000
Statement that there were no transfers between Level 1, Level 2 or Level 3 of fair value hierarchy, assets Common practice Text IFRS 13.93 c Common practice 823000
Statement that there were no transfers between Level 1, Level 2 or Level 3 of fair value hierarchy, entity's own equity instruments Common practice Text IFRS 13.93 c Common practice 823000
Statement that there were no transfers between Level 1, Level 2 or Level 3 of fair value hierarchy, liabilities Common practice Text IFRS 13.93 c Common practice 823000
Assets Disclosure MonetaryInstant, Debit IAS 1.55 Disclosure
IFRS 13.93 a Disclosure
IFRS 13.93 b Disclosure
IFRS 8.23 Disclosure
IFRS 8.28 c Disclosure
210000, 220000, 800100, 823000, 871100
Equity Disclosure MonetaryInstant, Credit IAS 1.55 Disclosure
IAS 1.78 e Disclosure
IFRS 1.24 a Disclosure
IFRS 1.32 a (i) Disclosure
IFRS 13.93 a Disclosure
IFRS 13.93 b Disclosure
210000, 220000, 610000, 819100, 823000
Increase (decrease) in fair value measurement, assets Disclosure MonetaryDuration, Debit 823000
Increase (decrease) in fair value measurement, entity's own equity instruments Disclosure MonetaryDuration, Credit 823000
Increase (decrease) in fair value measurement, liabilities Disclosure MonetaryDuration, Credit 823000
Liabilities Disclosure MonetaryInstant, Credit IAS 1.55 Disclosure
IFRS 13.93 a Disclosure
IFRS 13.93 b Disclosure
IFRS 8.23 Disclosure
IFRS 8.28 d Disclosure
210000, 220000, 800100, 823000, 871100

(f)

for recurring fair value measurements categorised within Level 3 of the fair value hierarchy, the amount of the total gains or losses for the period in (e)(i) included in profit or loss that is attributable to the change in unrealised gains or losses [Refer:Basis for Conclusions paragraph BC198] relating to those assets and liabilities held at the end of the reporting period, and the line item(s) in profit or loss in which those unrealised gains or losses are recognised. [Refer:Illustrative Examples, example 16]

Description of line items in profit or loss where gains (losses) attributable to change in unrealised gains or losses for assets held at end of period are recognised, fair value measurement Disclosure Text 823000
Description of line items in profit or loss where gains (losses) attributable to change in unrealised gains or losses for entity's own equity instruments held at end of period are recognised, fair value measurement Disclosure Text 823000
Description of line items in profit or loss where gains (losses) attributable to change in unrealised gains or losses for liabilities held at end of period are recognised, fair value measurement Disclosure Text 823000
Gains (losses) recognised in profit or loss attributable to change in unrealised gains or losses for assets held at end of period, fair value measurement Disclosure MonetaryDuration, Credit 823000
Gains (losses) recognised in profit or loss attributable to change in unrealised gains or losses for entity's own equity instruments held at end of period, fair value measurement Disclosure MonetaryDuration, Credit 823000
Gains (losses) recognised in profit or loss attributable to change in unrealised gains or losses for liabilities held at end of period, fair value measurement Disclosure MonetaryDuration, Credit 823000

(g)

for recurring and non‑recurring fair value measurements categorised within Level 3 of the fair value hierarchy, a description of the valuation processes used by the entity (including, for example, how an entity decides its valuation policies and procedures and analyses changes in fair value measurements from period to period). [Refer:Illustrative Examples, example 18 and Basis for Conclusions paragraphs BC200 and BC201]

Description of frequency and methods for testing procedures of pricing models, assets Example Text IFRS 13.IE65 b Example 823000
Description of frequency and methods for testing procedures of pricing models, entity's own equity instruments Example Text IFRS 13.IE65 b Example 823000
Description of frequency and methods for testing procedures of pricing models, liabilities Example Text IFRS 13.IE65 b Example 823000
Description of group within entity that decides entity's valuation policies and procedures, assets Example Text IFRS 13.IE65 a (i) Example 823000
Description of group within entity that decides entity's valuation policies and procedures, entity's own equity instruments Example Text IFRS 13.IE65 a (i) Example 823000
Description of group within entity that decides entity's valuation policies and procedures, liabilities Example Text IFRS 13.IE65 a (i) Example 823000
Description of how entity determined that third-party information used in fair value measurement was developed in accordance with IFRS 13, assets Example Text IFRS 13.IE65 d Example 823000
Description of how entity determined that third-party information used in fair value measurement was developed in accordance with IFRS 13, entity's own equity instruments Example Text IFRS 13.IE65 d Example 823000
Description of how entity determined that third-party information used in fair value measurement was developed in accordance with IFRS 13, liabilities Example Text IFRS 13.IE65 d Example 823000
Description of internal reporting procedures for discussing and assessing fair value measurements, assets Example Text IFRS 13.IE65 a (iii) Example 823000
Description of internal reporting procedures for discussing and assessing fair value measurements, entity's own equity instruments Example Text IFRS 13.IE65 a (iii) Example 823000
Description of internal reporting procedures for discussing and assessing fair value measurements, liabilities Example Text IFRS 13.IE65 a (iii) Example 823000
Description of methods used to develop and substantiate unobservable inputs used in fair value measurement, assets Example Text IFRS 13.IE65 e Example 823000
Description of methods used to develop and substantiate unobservable inputs used in fair value measurement, entity's own equity instruments Example Text IFRS 13.IE65 e Example 823000
Description of methods used to develop and substantiate unobservable inputs used in fair value measurement, liabilities Example Text IFRS 13.IE65 e Example 823000
Description of process for analysing changes in fair value measurements, assets Example Text IFRS 13.IE65 c Example 823000
Description of process for analysing changes in fair value measurements, entity's own equity instruments Example Text IFRS 13.IE65 c Example 823000
Description of process for analysing changes in fair value measurements, liabilities Example Text IFRS 13.IE65 c Example 823000
Description of to whom group within entity that decides entity's valuation policies and procedures reports, assets Example Text IFRS 13.IE65 a (ii) Example 823000
Description of to whom group within entity that decides entity's valuation policies and procedures reports, entity's own equity instruments Example Text IFRS 13.IE65 a (ii) Example 823000
Description of to whom group within entity that decides entity's valuation policies and procedures reports, liabilities Example Text IFRS 13.IE65 a (ii) Example 823000
Description of valuation processes used in fair value measurement, assets Disclosure Text 823000
Description of valuation processes used in fair value measurement, entity's own equity instruments Disclosure Text 823000
Description of valuation processes used in fair value measurement, liabilities Disclosure Text 823000

(h)

for recurring fair value measurements categorised within Level 3 of the fair value hierarchy:

(i)

for all such measurements, a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs if a change in those inputs to a different amount might result in a significantly higher or lower fair value measurement. If there are interrelationships between those inputs and other unobservable inputs used in the fair value measurement, an entity shall also provide a description of those interrelationships and of how they might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement. To comply with that disclosure requirement, the narrative description of the sensitivity to changes in unobservable inputs shall include, at a minimum, the unobservable inputs disclosed when complying with (d). [Refer:Basis for Conclusions paragraphs BC202⁠–⁠BC207 and Illustrative Examples, example 19]

Description of interrelationships between unobservable inputs and of how they might magnify or mitigate effect of changes in unobservable inputs on fair value measurement, assets Disclosure Text 823000
Description of interrelationships between unobservable inputs and of how they might magnify or mitigate effect of changes in unobservable inputs on fair value measurement, entity's own equity instruments Disclosure Text 823000
Description of interrelationships between unobservable inputs and of how they might magnify or mitigate effect of changes in unobservable inputs on fair value measurement, liabilities Disclosure Text 823000
Description of sensitivity of fair value measurement to changes in unobservable inputs, assets Disclosure Text 823000
Description of sensitivity of fair value measurement to changes in unobservable inputs, entity's own equity instruments Disclosure Text 823000
Description of sensitivity of fair value measurement to changes in unobservable inputs, liabilities Disclosure Text 823000

(ii)

for financial assets and financial liabilities, if changing one or more of the unobservable inputs to reflect reasonably possible alternative assumptions would change fair value significantly, an entity shall state that fact and disclose the effect of those changes. The entity shall disclose how the effect of a change to reflect a reasonably possible alternative assumption was calculated. For that purpose, significance shall be judged with respect to profit or loss, and total assets or total liabilities, or, when changes in fair value are recognised in other comprehensive income, total equity. [Refer:Basis for Conclusions paragraphs BC208⁠–⁠BC210]

Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, after tax, assets Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, after tax, entity's own equity instruments Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, after tax, liabilities Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, before tax, assets Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, before tax, entity's own equity instruments Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, before tax, liabilities Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, after tax, assets Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, after tax, entity's own equity instruments Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, after tax, liabilities Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, before tax, assets Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, before tax, entity's own equity instruments Common practice MonetaryDuration 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, before tax, liabilities Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in other comprehensive income, after tax, assets Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in other comprehensive income, after tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in other comprehensive income, after tax, liabilities Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in other comprehensive income, before tax, assets Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in other comprehensive income, before tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in other comprehensive income, before tax, liabilities Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in profit or loss, after tax, assets Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in profit or loss, after tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in profit or loss, after tax, liabilities Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in profit or loss, before tax, assets Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in profit or loss, before tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, recognised in profit or loss, before tax, liabilities Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in other comprehensive income, after tax, assets Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in other comprehensive income, after tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in other comprehensive income, after tax, liabilities Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in other comprehensive income, before tax, assets Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in other comprehensive income, before tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in other comprehensive income, before tax, liabilities Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in profit or loss, after tax, assets Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in profit or loss, after tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in profit or loss, after tax, liabilities Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in profit or loss, before tax, assets Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in profit or loss, before tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, recognised in profit or loss, before tax, liabilities Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, after tax, assets Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, after tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, after tax, liabilities Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, before tax, assets Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, before tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in other comprehensive income, before tax, liabilities Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, after tax, assets Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, after tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, after tax, liabilities Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, before tax, assets Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, before tax, entity's own equity instruments Common practice MonetaryDuration 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, recognised in profit or loss, before tax, liabilities Common practice MonetaryDuration 823000
Percentage of reasonably possible decrease in unobservable input, assets Common practice Percent 823000
Percentage of reasonably possible decrease in unobservable input, entity's own equity instruments Common practice Percent 823000
Percentage of reasonably possible decrease in unobservable input, liabilities Common practice Percent 823000
Percentage of reasonably possible increase in unobservable input, assets Common practice Percent 823000
Percentage of reasonably possible increase in unobservable input, entity's own equity instruments Common practice Percent 823000
Percentage of reasonably possible increase in unobservable input, liabilities Common practice Percent 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, assets Disclosure MonetaryDuration, Credit 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, entity's own equity instruments Disclosure MonetaryDuration, Debit 823000
Decrease in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, liabilities Disclosure MonetaryDuration, Debit 823000
Description of fact that changing one or more unobservable inputs to reflect reasonably possible alternative assumptions would change fair value significantly, assets Disclosure Text 823000
Description of fact that changing one or more unobservable inputs to reflect reasonably possible alternative assumptions would change fair value significantly, entity's own equity instruments Disclosure Text 823000
Description of fact that changing one or more unobservable inputs to reflect reasonably possible alternative assumptions would change fair value significantly, liabilities Disclosure Text 823000
Description of how effect on fair value measurement due to change in one or more unobservable inputs to reflect reasonably possible alternative assumptions was calculated, assets Disclosure Text 823000
Description of how effect on fair value measurement due to change in one or more unobservable inputs to reflect reasonably possible alternative assumptions was calculated, entity's own equity instruments Disclosure Text 823000
Description of how effect on fair value measurement due to change in one or more unobservable inputs to reflect reasonably possible alternative assumptions was calculated, liabilities Disclosure Text 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, assets Disclosure MonetaryDuration, Debit 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, entity's own equity instruments Disclosure MonetaryDuration, Credit 823000
Increase (decrease) in fair value measurement due to reasonably possible decrease in unobservable input, liabilities Disclosure MonetaryDuration, Credit 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, assets Disclosure MonetaryDuration, Debit 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, entity's own equity instruments Disclosure MonetaryDuration, Credit 823000
Increase (decrease) in fair value measurement due to reasonably possible increase in unobservable input, liabilities Disclosure MonetaryDuration, Credit 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, assets Disclosure MonetaryDuration, Debit 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, entity's own equity instruments Disclosure MonetaryDuration, Credit 823000
Increase in fair value measurement due to change in multiple unobservable inputs to reflect reasonably possible alternative assumptions, liabilities Disclosure MonetaryDuration, Credit 823000
Disclosure of sensitivity analysis of fair value measurement to changes in unobservable inputs, assets [table] Disclosure 823000
Disclosure of sensitivity analysis of fair value measurement to changes in unobservable inputs, assets [text block] Disclosure Text block 823000
Disclosure of sensitivity analysis of fair value measurement to changes in unobservable inputs, entity's own equity instruments [table] Disclosure 823000
Disclosure of sensitivity analysis of fair value measurement to changes in unobservable inputs, entity's own equity instruments [text block] Disclosure Text block 823000
Disclosure of sensitivity analysis of fair value measurement to changes in unobservable inputs, liabilities [table] Disclosure 823000
Disclosure of sensitivity analysis of fair value measurement to changes in unobservable inputs, liabilities [text block] Disclosure Text block 823000
Unobservable inputs [axis] Common practice IFRS 13.93 d Disclosure 823000, 990000
Unobservable inputs [domain] Common practice IFRS 13.93 d Disclosure 823000, 990000

(i)

for recurring and non‑recurring fair value measurements, if the highest and best use of a non‑financial asset differs from its current use, an entity shall disclose that fact and why the non‑financial asset is being used in a manner that differs from its highest and best use. [Refer:paragraph 29 and Basis for Conclusions paragraphs BC73, BC213 and BC214]

Description of fact that highest and best use of non-financial asset differs from current use Disclosure Text 823000
Description of reason why non-financial asset is being used in manner different from highest and best use Disclosure Text 823000
Classes of assets [axis] Disclosure IAS 36.126 Disclosure
IAS 36.130 d (ii) Disclosure
IFRS 16.53 Disclosure
823000, 832410, 832610, 990000
Classes of assets [domain] Disclosure IAS 36.126 Disclosure
IFRS 16.53 Disclosure
823000, 832410, 832610, 990000
Classes of entity's own equity instruments [axis] Disclosure 823000, 990000
Classes of entity's own equity instruments [domain] Disclosure 823000, 990000
Classes of liabilities [axis] Disclosure 823000, 990000
Classes of liabilities [domain] Disclosure 823000, 990000
Disclosure of fair value measurement of assets [table] Disclosure 823000
Disclosure of fair value measurement of assets [text block] Disclosure Text block 823000
Disclosure of fair value measurement of equity [table] Disclosure 823000
Disclosure of fair value measurement of equity [text block] Disclosure Text block 823000
Disclosure of fair value measurement of liabilities [table] Disclosure 823000
Disclosure of fair value measurement of liabilities [text block] Disclosure Text block 823000

94

An entity shall determine appropriate classes of assets and liabilities on the basis of the following:

(a)

the nature, characteristics [Refer:paragraph 11] and risks of the asset or liability; and

(b)

the level of the fair value hierarchy within which the fair value measurement is categorised. [Refer:paragraphs 72 and 73]

The number of classes may need to be greater for fair value measurements categorised within Level 3 of the fair value hierarchy [Refer:Basis for Conclusions paragraph BC193] because those measurements have a greater degree of uncertainty and subjectivity. Determining appropriate classes of assets and liabilities for which disclosures about fair value measurements should be provided requires judgement. A class of assets and liabilities will often require greater disaggregation than the line items presented in the statement of financial position. However, an entity shall provide information sufficient to permit reconciliation to the line items presented in the statement of financial position. If another IFRS specifies the class for an asset or a liability, an entity may use that class in providing the disclosures required in this IFRS if that class meets the requirements in this paragraph.

Debt securities [member] Example IFRS 13.IE60 Example 823000
Derivatives [member] Example IFRS 13.IE60 Example
IFRS 7.6 Example
IFRS 7.IG40B Example
822390, 823000
Hedge fund investments [member] Example IFRS 13.IE60 Example 823000
Investment property [member] Example IFRS 13.IE60 Example 823000
Non-current assets held for sale [member] Example IFRS 13.IE60 Example
IFRS 5.38 Common practice
823000, 904000
Other equity securities [member] Example IFRS 13.IE60 Example 823000
Trading equity securities [member] Example IFRS 13.IE60 Example 823000
Disclosure of information sufficient to permit reconciliation of classes determined for fair value measurement to line items in statement of financial position, assets [text block] Disclosure Text block 823000
Disclosure of information sufficient to permit reconciliation of classes determined for fair value measurement to line items in statement of financial position, entity's own equity instruments [text block] Disclosure Text block 823000
Disclosure of information sufficient to permit reconciliation of classes determined for fair value measurement to line items in statement of financial position, liabilities [text block] Disclosure Text block 823000
Contingent consideration [member] Common practice 823000

95

An entity shall disclose and consistently follow its policy for determining when transfers between levels of the fair value hierarchy are deemed to have occurred in accordance with paragraph 93(c) and (e)(iv). The policy about the timing of recognising transfers shall be the same for transfers into the levels as for transfers out of the levels. Examples of policies for determining the timing of transfers include the following:

(a)

the date of the event or change in circumstances that caused the transfer.

(b)

the beginning of the reporting period.

(c)

the end of the reporting period.

Description of policy for determining when transfers between levels are deemed to have occurred, assets Disclosure Text IFRS 13.93 c Disclosure
IFRS 13.93 e (iv) Disclosure
823000
Description of policy for determining when transfers between levels are deemed to have occurred, entity's own equity instruments Disclosure Text IFRS 13.93 c Disclosure
IFRS 13.93 e (iv) Disclosure
823000
Description of policy for determining when transfers between levels are deemed to have occurred, liabilities Disclosure Text IFRS 13.93 c Disclosure
IFRS 13.93 e (iv) Disclosure
823000

96

If an entity makes an accounting policy decision to use the exception in paragraph 48, it shall disclose that fact.

Accounting policy decision to use exception in IFRS 13.48, assets Disclosure True/False 823000
Accounting policy decision to use exception in IFRS 13.48, liabilities Disclosure True/False 823000
Description of accounting policy decision to use exception in IFRS 13.48, assets Disclosure Text 823000
Description of accounting policy decision to use exception in IFRS 13.48, liabilities Disclosure Text 823000

97

For each class of assets and liabilities not measured at fair value in the statement of financial position but for which the fair value is disclosed, [Refer:IFRS 7 paragraph 25, IAS 16 paragraph 79(d) and IAS 40 paragraph 79(e)] an entity shall disclose the information required by paragraph 93(b), (d) and (i) [Refer:Basis for Conclusions paragraphs BC215⁠–⁠BC217]. However, an entity is not required to provide the quantitative disclosures about significant unobservable inputs used in fair value measurements categorised within Level 3 of the fair value hierarchy required by paragraph 93(d). For such assets and liabilities, an entity does not need to provide the other disclosures required by this IFRS.

Not measured at fair value in statement of financial position but for which fair value is disclosed [member] Disclosure 823000

98

For a liability measured at fair value and issued with an inseparable third‑party credit enhancement, an issuer shall disclose the existence of that credit enhancement and whether it is reflected in the fair value measurement of the liability. [Refer:paragraphs 39(b) and 44]

Description of existence of third-party credit enhancement Disclosure Text 823000
Description of whether third-party credit enhancement is reflected in fair value measurement Disclosure Text 823000
Disclosure of liabilities measured at fair value and issued with inseparable third-party credit enhancement [table] Disclosure 823000
Disclosure of liabilities measured at fair value and issued with inseparable third-party credit enhancement [text block] Disclosure Text block 823000
Liabilities measured at fair value and issued with inseparable third-party credit enhancement [axis] Disclosure 823000, 990000
Liabilities measured at fair value and issued with inseparable third-party credit enhancement [domain] Disclosure 823000, 990000

99

An entity shall present the quantitative disclosures required by this IFRS in a tabular format unless another format is more appropriate. [Refer:paragraphs 15⁠–⁠17 and Illustrative Examples, examples 15 and 17]

Appendices

Appendix ADefined terms

This appendix is an integral part of the IFRS.

active market

A market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

cost approach

A valuation technique that reflects the amount that would be required currently to replace the service capacity of an asset (often referred to as current replacement cost). [Refer:paragraphs B8 and B9]

entry price

The price paid to acquire an asset or received to assume a liability in an exchange transaction.

exit price

The price that would be received to sell an asset or paid to transfer a liability. [Refer:Basis for Conclusions paragraphs BC36⁠–⁠BC45]

expected cash flow

The probability‑weighted average (ie mean of the distribution) of possible future cash flows.

fair value

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. [Refer:Basis for Conclusions paragraphs BC27⁠–⁠BC35]

highest and best use

The use of a non‑financial asset by market participants that would maximise the value of the asset or the group of assets and liabilities (eg a business) within which the asset would be used. [Refer:paragraphs 27⁠–⁠30, Basis for Conclusions paragraphs BC68⁠–⁠BC73 and Illustrative Examples, examples 1⁠–⁠5]

income approach

Valuation techniques that convert future amounts (eg cash flows or income and expenses) to a single current (ie discounted) amount. The fair value measurement is determined on the basis of the value indicated by current market expectations about those future amounts. [Refer:paragraphs B10 and B11]

inputs

The assumptions that market participants would use when pricing the asset or liability, including assumptions about risk, such as the following:

(a)

the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model); and

(b)

the risk inherent in the inputs to the valuation technique.

Inputs may be observable or unobservable.

Level 1 inputs

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. [Refer:paragraphs 76⁠–⁠80 and Basis for Conclusions paragraphs BC168⁠–⁠BC170]

Level 2 inputs

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. [Refer:paragraphs 81⁠–⁠85, B35 and Basis for Conclusions paragraph BC171]

Level 3 inputs

Unobservable inputs for the asset or liability. [Refer:paragraphs 86⁠–⁠90, B36 and Basis for Conclusions paragraphs BC172⁠–⁠BC175]

market approach

A valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable (ie similar) assets, liabilities or a group of assets and liabilities, such as a business. [Refer:paragraphs B5⁠–⁠B7]

market‑corroborated inputs

Inputs that are derived principally from or corroborated by observable market data by correlation or other means. [Refer:Basis for Conclusions paragraph BC171]

market participant

Buyers and sellers in the principal (or most advantageous) market for the asset or liability that have all of the following characteristics: [Refer:paragraphs 22 and 23 and Basis for Conclusions paragraphs BC55 and BC56]

(a)

They are independent [Refer:Basis for Conclusions paragraph BC57] of each other, ie they are not related parties as defined in IAS 24, although the price in a related party transaction may be used as an input to a fair value measurement if the entity has evidence that the transaction was entered into at market terms.

(b)

They are knowledgeable, [Refer:Basis for Conclusions paragraph BC58] having a reasonable understanding about the asset or liability and the transaction using all available information, including information that might be obtained through due diligence efforts that are usual and customary.

(c)

They are able to enter into a transaction for the asset or liability. [Refer:Basis for Conclusions paragraph BC56]

(d)

They are willing [Refer:Basis for Conclusions paragraphs BC56 and BC59] to enter into a transaction for the asset or liability, ie they are motivated but not forced or otherwise compelled to do so.

most advantageous market

The market that maximises the amount that would be received to sell the asset or minimises the amount that would be paid to transfer the liability, after taking into account transaction costs and transport costs. [Refer:Basis for Conclusions paragraphs BC48⁠–⁠BC54 and Illustrative Examples, example 6]

non-performance risk

The risk that an entity will not fulfil an obligation. Non‑performance risk includes, but may not be limited to, the entity’s own credit risk. [Refer:paragraphs 42⁠–⁠44 and Basis for Conclusions paragraphs BC92⁠–⁠BC95]

observable inputs

Inputs that are developed using market data, such as publicly available information about actual events or transactions, and that reflect the assumptions that market participants would use when pricing the asset or liability.

orderly transaction

A transaction that assumes exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction (eg a forced liquidation or distress sale). [Refer:paragraph B43 and Basis for Conclusions paragraph BC181]

principal market

The market with the greatest volume and level of activity for the asset or liability. [Refer:Illustrative Examples, example 6]

risk premium

Compensation sought by risk‑averse market participants for bearing the uncertainty inherent in the cash flows of an asset or a liability. Also referred to as a ‘risk adjustment’. [Refer:paragraphs B16 and B44]

transaction costs

The costs to sell an asset or transfer a liability in the principal (or most advantageous) market for the asset or liability that are directly attributable to the disposal of the asset or the transfer of the liability and meet both of the following criteria:

(a)

They result directly from and are essential to that transaction.

(b)

They would not have been incurred by the entity had the decision to sell the asset or transfer the liability not been made (similar to costs to sell, as defined in IFRS 5).

transport costs

The costs that would be incurred to transport an asset from its current location to its principal (or most advantageous) market. [Refer:paragraph 26]

unit of account

The level at which an asset or a liability is aggregated or disaggregated in an IFRS for recognition purposes. [Refer:paragraph B4(c) and Basis for Conclusions paragraph BC77]

unobservable inputs

Inputs for which market data are not available and that are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability. [Refer:paragraphs 87 and 89]

Appendix BApplication guidance

This appendix is an integral part of the IFRS. It describes the application of paragraphs 1⁠–⁠99 and has the same authority as the other parts of the IFRS.

B1

The judgements applied in different valuation situations may be different. This appendix describes the judgements that might apply when an entity measures fair value in different valuation situations.

The fair value measurement approach

B2

The objective of a fair value measurement [Refer:paragraph 2] is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants [Refer:paragraphs 22 and 23] at the measurement date under current market conditions. A fair value measurement requires an entity to determine all the following:

(a)

the particular asset or liability that is the subject of the measurement (consistently with its unit of account [Refer:paragraph 11 and Basis for Conclusions paragraphs BC46 and BC47]).

(b)

for a non‑financial asset, the valuation premise [Refer:Basis for Conclusions paragraphs BC74⁠–⁠BC79] that is appropriate for the measurement (consistently with its highest and best use [Refer:paragraphs 27⁠–⁠32 and Basis for Conclusions paragraphs BC68⁠–⁠BC73]).

(c)

the principal (or most advantageous) market for the asset or liability. [Refer:paragraph 16 and Basis for Conclusion paragraphs BC48⁠–⁠BC53]

(d)

the valuation technique(s) [Refer:paragraph 61 and Basis for Conclusions paragraphs BC139⁠–⁠BC142] appropriate for the measurement, considering the availability of data with which to develop inputs [Refer:paragraphs 67⁠–⁠69 and Basis for Conclusions paragraph BC151] that represent the assumptions that market participants would use when pricing the asset or liability [Refer:paragraphs 22, 23 and Basis for Conclusions paragraph BC55] and the level of the fair value hierarchy [Refer:paragraphs 72⁠–⁠74 and Basis for Conclusions paragraph BC166] within which the inputs are categorised.

Valuation premise for non-financial assets (paragraphs 31⁠–⁠33)

B3

When measuring the fair value of a non‑financial asset used in combination with other assets as a group (as installed or otherwise configured for use) or in combination with other assets and liabilities [Refer:paragraph 31(a)] (eg a business), the effect of the valuation premise depends on the circumstances. For example:

(a)

the fair value of the asset might be the same whether the asset is used on a stand‑alone basis or in combination with other assets or with other assets and liabilities [Refer:paragraph 31(a)]. That might be the case if the asset is a business that market participants [Refer:paragraphs 22 and 23] would continue to operate. In that case, the transaction would involve valuing the business in its entirety. The use of the assets as a group in an ongoing business would generate synergies that would be available to market participants (ie market participant synergies that, therefore, should affect the fair value of the asset on either a stand‑alone basis [Refer:paragraph 31(b)] or in combination with other assets or with other assets and liabilities [Refer:paragraph 31(a)]).

(b)

an asset’s use in combination with other assets or with other assets and liabilities might be incorporated into the fair value measurement through adjustments to the value of the asset used on a stand‑alone basis. [Refer:paragraph 31(b)] That might be the case if the asset is a machine and the fair value measurement is determined using an observed price [Refer:paragraph 67] for a similar machine (not installed or otherwise configured for use), adjusted for transport [Refer:paragraph 26] and installation costs so that the fair value measurement reflects the current condition and location of the machine (installed and configured for use).

(c)

an asset’s use in combination with other assets or with other assets and liabilities [Refer:paragraph 31(a)] might be incorporated into the fair value measurement through the market participant assumptions [Refer:paragraph 22] used to measure the fair value of the asset. For example, if the asset is work in progress inventory that is unique and market participants would convert the inventory into finished goods, the fair value of the inventory would assume that market participants have acquired or would acquire [Refer:paragraph 31(a)(i)] any specialised machinery necessary to convert the inventory into finished goods.

(d)

an asset’s use in combination with other assets or with other assets and liabilities [Refer:paragraph 31(a)] might be incorporated into the valuation technique [Refer:paragraph 61] used to measure the fair value of the asset. That might be the case when using the multi‑period excess earnings method [Refer:paragraph B11(c)] to measure the fair value of an intangible asset because that valuation technique specifically takes into account the contribution of any complementary assets [Refer:paragraph 31(a)(i)] and the associated liabilities [Refer:paragraph 31(a)(ii)] in the group in which such an intangible asset would be used.

(e)

in more limited situations, when an entity uses an asset within a group of assets [Refer:paragraph 31(a)], the entity might measure the asset at an amount that approximates its fair value when allocating the fair value of the asset group to the individual assets of the group. That might be the case if the valuation involves real property and the fair value of improved property (ie an asset group) is allocated to its component assets (such as land and improvements).

Fair value at initial recognition (paragraphs 57⁠–⁠60)

B4

When determining whether fair value at initial recognition equals the transaction price, an entity shall take into account factors specific to the transaction and to the asset or liability. For example, the transaction price might not represent the fair value of an asset or a liability at initial recognition if any of the following conditions exist:

(a)

The transaction is between related parties, although the price in a related party transaction may be used as an input into a fair value measurement if the entity has evidence that the transaction was entered into at market terms.

(b)

The transaction takes place under duress or the seller is forced to accept the price in the transaction. For example, that might be the case if the seller is experiencing financial difficulty.

(c)

The unit of account [Refer:paragraph 14] represented by the transaction price is different from the unit of account for the asset or liability measured at fair value. For example, that might be the case if the asset or liability measured at fair value is only one of the elements in the transaction (eg in a business combination), the transaction includes unstated rights and privileges that are measured separately in accordance with another IFRS, or the transaction price includes transaction costs.

(d)

The market in which the transaction takes place is different from the principal market [Refer:paragraph 16(a)] (or most advantageous market [Refer:paragraph 16(b)]). For example, those markets might be different if the entity is a dealer that enters into transactions with customers in the retail market, but the principal (or most advantageous) market for the exit transaction is with other dealers in the dealer market. [Refer:paragraph B34(b)]

Valuation techniques (paragraphs 61⁠–⁠66)

Market approach

B5

The market approach uses prices and other relevant information generated by market transactions involving identical or comparable (ie similar) assets, liabilities or a group of assets and liabilities, such as a business. [Refer:paragraph 82(a) and 82(b)]

Consensus pricing [member] Example IFRS 13.IE63 Example 823000
Market comparable companies [member] Example IFRS 13.IE63 Example 823000
Market comparable prices [member] Example IFRS 13.IE63 Example 823000

B6

For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might be in ranges with a different multiple for each comparable. The selection of the appropriate multiple within the range [Refer:paragraph 63] requires judgement, considering qualitative and quantitative factors specific to the measurement.

Bottom of range [member] Example IAS 7.44H b (iii) Disclosure
IFRS 13.IE63 Example
IFRS 14.33 b Disclosure
IFRS 17.120 Disclosure
IFRS 2.45 d Disclosure
IFRS 7.7 Common practice
822390, 823000, 824500, 834120, 836600, 851100
Range [axis] Example IAS 7.44H b (iii) Disclosure
IFRS 13.IE63 Example
IFRS 14.33 b Disclosure
IFRS 17.120 Disclosure
IFRS 2.45 d Disclosure
IFRS 7.7 Common practice
822390, 823000, 824500, 834120, 836600, 851100, 990000
Range [domain] Example IAS 7.44H b (iii) Disclosure
IFRS 13.IE63 Example
IFRS 14.33 b Disclosure
IFRS 17.120 Disclosure
IFRS 2.45 d Disclosure
IFRS 7.7 Common practice
822390, 823000, 824500, 834120, 836600, 851100, 990000
Top of range [member] Example IAS 7.44H b (iii) Disclosure
IFRS 13.IE63 Example
IFRS 14.33 b Disclosure
IFRS 17.120 Disclosure
IFRS 2.45 d Disclosure
IFRS 7.7 Common practice
822390, 823000, 824500, 834120, 836600, 851100
Weighted average [member] Example IFRS 13.IE63 Example
IFRS 14.33 b Disclosure
IFRS 17.120 Disclosure
IFRS 7.7 Common practice
822390, 823000, 824500, 836600

B7

Valuation techniques consistent with the market approach include matrix pricing. [Refer:paragraph 79(a) and Basis for Conclusions paragraph BC170] Matrix pricing is a mathematical technique used principally to value some types of financial instruments, such as debt securities, without relying exclusively on quoted prices for the specific securities, but rather relying on the securities’ relationship to other benchmark quoted securities.

Matrix pricing [member] Example 823000

Cost approach

B8

The cost approach reflects the amount that would be required currently to replace the service capacity of an asset (often referred to as current replacement cost).

B9

From the perspective of a market participant [Refer:paragraphs 22 and 23] seller, the price that would be received for the asset is based on the cost to a market participant buyer to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence. That is because a market participant buyer would not pay more for an asset than the amount for which it could replace the service capacity of that asset. Obsolescence encompasses physical deterioration, functional (technological) obsolescence and economic (external) obsolescence and is broader than depreciation for financial reporting purposes (an allocation of historical cost) or tax purposes (using specified service lives). In many cases the current replacement cost method is used to measure the fair value of tangible assets that are used in combination with other assets or with other assets and liabilities. [Refer:paragraph 31(a)]

Income approach

B10

The income approach converts future amounts (eg cash flows or income and expenses) to a single current (ie discounted) amount. When the income approach is used, the fair value measurement reflects current market expectations about those future amounts. [Refer:paragraph 22]

B11

Those valuation techniques include, for example, the following:

(a)

present value techniques (see paragraphs B12⁠–⁠B30);

Discounted cash flow [member] Example IFRS 13.IE63 Example 823000

(b)

option pricing models, such as the Black‑Scholes‑Merton formula or a binomial model (ie a lattice model), that incorporate present value techniques and reflect both the time value and the intrinsic value of an option; and

Option pricing model [member] Example IFRS 13.IE63 Example 823000

(c)

the multi‑period excess earnings method, which is used to measure the fair value of some intangible assets. [Refer:paragraph B3(d)]

Multi-period excess earnings method [member] Example 823000

Present value techniques

B12

Paragraphs B13⁠–⁠B30 describe the use of present value techniques to measure fair value. Those paragraphs focus on a discount rate adjustment technique and an expected cash flow (expected present value) technique. Those paragraphs neither prescribe the use of a single specific present value technique nor limit the use of present value techniques to measure fair value to the techniques discussed. The present value technique used to measure fair value will depend on facts and circumstances specific to the asset or liability being measured (eg whether prices for comparable assets or liabilities can be observed in the market) and the availability of sufficient data.

The components of a present value measurement

B13

Present value (ie an application of the income approach) is a tool used to link future amounts (eg cash flows or values) to a present amount using a discount rate. A fair value measurement of an asset or a liability using a present value technique captures all the following elements from the perspective of market participants [Refer:paragraphs 22 and 23] at the measurement date:

(a)

an estimate of future cash flows for the asset or liability being measured.

(b)

expectations about possible variations in the amount and timing of the cash flows representing the uncertainty inherent in the cash flows.

(c)

the time value of money, represented by the rate on risk‑free monetary assets that have maturity dates or durations that coincide with the period covered by the cash flows and pose neither uncertainty in timing nor risk of default to the holder (ie a risk‑free interest rate).

(d)

the price for bearing the uncertainty inherent in the cash flows (ie a risk premium). [Refer:paragraphs 88, B31(b), B33, Basis for Conclusions paragraphs BC90, BC91, BC143, BC146, BC149, BC150 and Illustrative Examples, examples 10, 11 and 13]

(e)

other factors that market participants would take into account in the circumstances.

(f)

for a liability, the non‑performance risk relating to that liability, including the entity’s (ie the obligor’s) own credit risk.

General principles

B14

Present value techniques differ in how they capture the elements in paragraph B13. However, all the following general principles govern the application of any present value technique used to measure fair value:

(a)

Cash flows and discount rates should reflect assumptions that market participants would use when pricing the asset or liability.

(b)

Cash flows and discount rates should take into account only the factors attributable to the asset or liability being measured.

(c)

To avoid double‑counting or omitting the effects of risk factors, discount rates should reflect assumptions that are consistent with those inherent in the cash flows. For example, a discount rate that reflects the uncertainty in expectations about future defaults [Refer:paragraph 43] is appropriate if using contractual cash flows of a loan (ie a discount rate adjustment technique). That same rate should not be used if using expected (ie probability‑weighted) cash flows (ie an expected present value technique) because the expected cash flows already reflect assumptions about the uncertainty in future defaults; instead, a discount rate that is commensurate with the risk inherent in the expected cash flows should be used.

(d)

Assumptions about cash flows and discount rates should be internally consistent. For example, nominal cash flows, which include the effect of inflation, should be discounted at a rate that includes the effect of inflation. The nominal risk‑free interest rate includes the effect of inflation. Real cash flows, which exclude the effect of inflation, should be discounted at a rate that excludes the effect of inflation. Similarly, after‑tax cash flows should be discounted using an after‑tax discount rate. Pre‑tax cash flows should be discounted at a rate consistent with those cash flows.

(e)

Discount rates should be consistent with the underlying economic factors of the currency in which the cash flows are denominated.

Risk and uncertainty

B15

A fair value measurement using present value techniques is made under conditions of uncertainty because the cash flows used are estimates rather than known amounts. In many cases both the amount and timing of the cash flows are uncertain. Even contractually fixed amounts, such as the payments on a loan, are uncertain if there is risk of default.

B16

Market participants [Refer:paragraphs 22 and 23] generally seek compensation (ie a risk premium) for bearing the uncertainty inherent in the cash flows of an asset or a liability. A fair value measurement should include a risk premium reflecting the amount that market participants would demand as compensation for the uncertainty inherent in the cash flows. Otherwise, the measurement would not faithfully represent fair value. In some cases determining the appropriate risk premium might be difficult. However, the degree of difficulty alone is not a sufficient reason to exclude a risk premium.

B17

Present value techniques differ in how they adjust for risk and in the type of cash flows they use. For example:

(a)

The discount rate adjustment technique (see paragraphs B18⁠–⁠B22) uses a risk‑adjusted discount rate and contractual, promised or most likely cash flows. [Refer:Illustrative Examples, example 14]

(b)

Method 1 of the expected present value technique (see paragraph B25) uses risk‑adjusted expected cash flows and a risk‑free rate.

(c)

Method 2 of the expected present value technique (see paragraph B26) uses expected cash flows that are not risk‑adjusted and a discount rate adjusted to include the risk premium that market participants require. That rate is different from the rate used in the discount rate adjustment technique. [Refer:Illustrative Examples, examples 10 and 11]

Discount rate adjustment technique

B18

The discount rate adjustment technique uses a single set of cash flows from the range of possible estimated amounts, whether contractual or promised (as is the case for a bond) or most likely cash flows. In all cases, those cash flows are conditional upon the occurrence of specified events (eg contractual or promised cash flows for a bond are conditional on the event of no default by the debtor). The discount rate used in the discount rate adjustment technique is derived from observed rates of return for comparable assets or liabilities that are traded in the market. Accordingly, the contractual, promised or most likely cash flows are discounted at an observed or estimated market rate for such conditional cash flows (ie a market rate of return).

B19

The discount rate adjustment technique requires an analysis of market data for comparable assets or liabilities. Comparability is established by considering the nature of the cash flows (eg whether the cash flows are contractual or non‑contractual and are likely to respond similarly to changes in economic conditions), as well as other factors (eg credit standing, collateral, duration, restrictive covenants and liquidity). Alternatively, if a single comparable asset or liability does not fairly reflect the risk inherent in the cash flows of the asset or liability being measured, it may be possible to derive a discount rate using data for several comparable assets or liabilities in conjunction with the risk‑free yield curve (ie using a ‘build‑up’ approach).

B20

To illustrate a build‑up approach, assume that Asset A is a contractual right to receive CU8001 in one year (ie there is no timing uncertainty). There is an established market for comparable assets, and information about those assets, including price information, is available. Of those comparable assets:

(a)

Asset B is a contractual right to receive CU1,200 in one year and has a market price of CU1,083. Thus, the implied annual rate of return (ie a one‑year market rate of return) is 10.8 per cent [(CU1,200/CU1,083) – 1].

(b)

Asset C is a contractual right to receive CU700 in two years and has a market price of CU566. Thus, the implied annual rate of return (ie a two‑year market rate of return) is 11.2 per cent [(CU700/CU566)^0.5 ⁠–⁠ 1].

(c)

All three assets are comparable with respect to risk (ie dispersion of possible pay‑offs and credit).

B21

On the basis of the timing of the contractual payments to be received for Asset A relative to the timing for Asset B and Asset C (ie one year for Asset B versus two years for Asset C), Asset B is deemed more comparable to Asset A. Using the contractual payment to be received for Asset A (CU800) and the one‑year market rate derived from Asset B (10.8 per cent), the fair value of Asset A is CU722 (CU800/1.108). Alternatively, in the absence of available market information for Asset B, the one‑year market rate could be derived from Asset C using the build‑up approach. In that case the two‑year market rate indicated by Asset C (11.2 per cent) would be adjusted to a one‑year market rate using the term structure of the risk‑free yield curve. Additional information and analysis might be required to determine whether the risk premiums for one‑year and two‑year assets are the same. If it is determined that the risk premiums for one‑year and two‑year assets are not the same, the two‑year market rate of return would be further adjusted for that effect.

B22

When the discount rate adjustment technique is applied to fixed receipts or payments, the adjustment for risk inherent in the cash flows of the asset or liability being measured is included in the discount rate. In some applications of the discount rate adjustment technique to cash flows that are not fixed receipts or payments, an adjustment to the cash flows may be necessary to achieve comparability with the observed asset or liability from which the discount rate is derived.

Expected present value technique

B23

The expected present value technique uses as a starting point a set of cash flows that represents the probability‑weighted average of all possible future cash flows (ie the expected cash flows). The resulting estimate is identical to expected value, which, in statistical terms, is the weighted average of a discrete random variable’s possible values with the respective probabilities as the weights. Because all possible cash flows are probability‑weighted, the resulting expected cash flow is not conditional upon the occurrence of any specified event (unlike the cash flows used in the discount rate adjustment technique).

B24

In making an investment decision, risk‑averse market participants [Refer:paragraphs 22 and 23] would take into account the risk that the actual cash flows may differ from the expected cash flows. Portfolio theory distinguishes between two types of risk:

(a)

unsystematic (diversifiable) risk, which is the risk specific to a particular asset or liability.

(b)

systematic (non‑diversifiable) risk, which is the common risk shared by an asset or a liability with the other items in a diversified portfolio.

Portfolio theory holds that in a market in equilibrium, market participants will be compensated only for bearing the systematic risk inherent in the cash flows. (In markets that are inefficient or out of equilibrium, other forms of return or compensation might be available.)

B25

Method 1 of the expected present value technique adjusts the expected cash flows of an asset for systematic (ie market) risk by subtracting a cash risk premium (ie risk‑adjusted expected cash flows). Those risk‑adjusted expected cash flows represent a certainty‑equivalent cash flow, which is discounted at a risk‑free interest rate. A certainty‑equivalent cash flow refers to an expected cash flow (as defined), adjusted for risk so that a market participant [Refer:paragraphs 22 and 23] is indifferent to trading a certain cash flow for an expected cash flow. For example, if a market participant was willing to trade an expected cash flow of CU1,200 for a certain cash flow of CU1,000, the CU1,000 is the certainty equivalent of the CU1,200 (ie the CU200 would represent the cash risk premium). In that case the market participant would be indifferent as to the asset held.

B26

In contrast, Method 2 of the expected present value technique adjusts for systematic (ie market) risk by applying a risk premium to the risk‑free interest rate. Accordingly, the expected cash flows are discounted at a rate that corresponds to an expected rate associated with probability‑weighted cash flows (ie an expected rate of return). Models used for pricing risky assets, such as the capital asset pricing model, can be used to estimate the expected rate of return. Because the discount rate used in the discount rate adjustment technique is a rate of return relating to conditional cash flows, it is likely to be higher than the discount rate used in Method 2 of the expected present value technique, which is an expected rate of return relating to expected or probability‑weighted cash flows.

B27

To illustrate Methods 1 and 2, assume that an asset has expected cash flows of CU780 in one year determined on the basis of the possible cash flows and probabilities shown below. The applicable risk‑free interest rate for cash flows with a one‑year horizon is 5 per cent, and the systematic risk premium for an asset with the same risk profile is 3 per cent.

Possible cash flows Probability Probability-weighted cash flows
CU500 15% CU75
CU800 60% CU480
CU900 25% CU225
Expected cash flows   CU780

B28

In this simple illustration, the expected cash flows (CU780) represent the probability‑weighted average of the three possible outcomes. In more realistic situations, there could be many possible outcomes. However, to apply the expected present value technique, it is not always necessary to take into account distributions of all possible cash flows using complex models and techniques. Rather, it might be possible to develop a limited number of discrete scenarios and probabilities that capture the array of possible cash flows. For example, an entity might use realised cash flows for some relevant past period, adjusted for changes in circumstances occurring subsequently (eg changes in external factors, including economic or market conditions, industry trends and competition as well as changes in internal factors affecting the entity more specifically), taking into account the assumptions of market participants.

B29

In theory, the present value (ie the fair value) of the asset’s cash flows is the same whether determined using Method 1 or Method 2, as follows:

(a)

Using Method 1, the expected cash flows are adjusted for systematic (ie market) risk. In the absence of market data directly indicating the amount of the risk adjustment, such adjustment could be derived from an asset pricing model using the concept of certainty equivalents. For example, the risk adjustment (ie the cash risk premium of CU22) could be determined using the systematic risk premium of 3 per cent (CU780 – [CU780 × (1.05/1.08)]), which results in risk‑adjusted expected cash flows of CU758 (CU780 – CU22). The CU758 is the certainty equivalent of CU780 and is discounted at the risk‑free interest rate (5 per cent). The present value (ie the fair value) of the asset is CU722 (CU758/1.05).

(b)

Using Method 2, the expected cash flows are not adjusted for systematic (ie market) risk. Rather, the adjustment for that risk is included in the discount rate. Thus, the expected cash flows are discounted at an expected rate of return of 8 per cent (ie the 5 per cent risk‑free interest rate plus the 3 per cent systematic risk premium). The present value (ie the fair value) of the asset is CU722 (CU780/1.08).

B30

When using an expected present value technique to measure fair value, either Method 1 or Method 2 could be used. The selection of Method 1 or Method 2 will depend on facts and circumstances specific to the asset or liability being measured, the extent to which sufficient data are available and the judgements applied.

Applying present value techniques to liabilities and an entity’s own equity instruments not held by other parties as assets (paragraphs 40 and 41)

B31

When using a present value technique to measure the fair value of a liability that is not held by another party as an asset (eg a decommissioning liability [Refer:Illustrative Examples, example 11]), an entity shall, among other things, estimate the future cash outflows that market participants [Refer:paragraphs 22 and 23] would expect to incur in fulfilling the obligation. Those future cash outflows shall include market participants’ expectations [Refer:paragraph 89] about the costs of fulfilling the obligation and the compensation that a market participant would require for taking on the obligation. Such compensation includes the return that a market participant would require for the following:

(a)

undertaking the activity (ie the value of fulfilling the obligation; eg by using resources that could be used for other activities); and

(b)

assuming the risk associated with the obligation (ie a risk premium [Refer:paragraph B8 and Basis for Conclusions paragraphs BC90, BC91, BC143, BC146, BC149, BC150 and Illustrative Examples, example 11] that reflects the risk that the actual cash outflows might differ from the expected cash outflows; see paragraph B33).

B32

For example, a non‑financial liability does not contain a contractual rate of return and there is no observable market yield for that liability. In some cases the components of the return that market participants would require will be indistinguishable from one another (eg when using the price a third party contractor would charge on a fixed fee basis). In other cases an entity needs to estimate those components separately (eg when using the price a third party contractor would charge on a cost plus basis because the contractor in that case would not bear the risk of future changes in costs).

B33

An entity can include a risk premium in the fair value measurement of a liability or an entity’s own equity instrument that is not held by another party as an asset in one of the following ways: [Refer:Basis for Conclusions paragraph BC91]

(a)

by adjusting the cash flows (ie as an increase in the amount of cash outflows); or

(b)

by adjusting the rate used to discount the future cash flows to their present values (ie as a reduction in the discount rate).

An entity shall ensure that it does not double‑count or omit adjustments for risk. For example, if the estimated cash flows are increased to take into account the compensation for assuming the risk associated with the obligation, the discount rate should not be adjusted to reflect that risk. [Refer:paragraph B14]

Inputs to valuation techniques (paragraphs 67⁠–⁠71)

B34

Examples of markets in which inputs might be observable for some assets and liabilities (eg financial instruments) include the following: [Refer:paragraph 68]

(a)

Exchange markets. In an exchange market, closing prices are both readily available and generally representative of fair value. An example of such a market is the London Stock Exchange.

(b)

Dealer markets. In a dealer market, dealers stand ready to trade (either buy or sell for their own account), thereby providing liquidity by using their capital to hold an inventory of the items for which they make a market. Typically bid and ask prices [Refer:paragraphs 70 and 71] (representing the price at which the dealer is willing to buy and the price at which the dealer is willing to sell, respectively) are more readily available than closing prices. Over‑the‑counter markets (for which prices are publicly reported) are dealer markets. Dealer markets also exist for some other assets and liabilities, including some financial instruments, commodities and physical assets (eg used equipment). [Refer:Basis for Conclusions paragraph BC165]

(c)

Brokered markets. In a brokered market, brokers attempt to match buyers with sellers but do not stand ready to trade for their own account. In other words, brokers do not use their own capital to hold an inventory of the items for which they make a market. The broker knows the prices bid and asked by the respective parties, but each party is typically unaware of another party’s price requirements. Prices of completed transactions are sometimes available. Brokered markets include electronic communication networks, in which buy and sell orders are matched, and commercial and residential real estate markets.

(d)

Principal‑to‑principal markets. [Refer:Basis for Conclusions paragraph BC165] In a principal‑to‑principal market, transactions, both originations and resales, are negotiated independently with no intermediary. Little information about those transactions may be made available publicly.

Fair value hierarchy (paragraphs 72⁠–⁠90)

Level 2 inputs (paragraphs 81⁠–⁠85)

B35

Examples of Level 2 inputs for particular assets and liabilities include the following:

(a)

Receive‑fixed, pay‑variable interest rate swap based on the London Interbank Offered Rate (LIBOR) swap rate. A Level 2 input would be the LIBOR swap rate if that rate is observable at commonly quoted intervals for substantially the full term of the swap. [Refer:paragraph 82]

(b)

Receive‑fixed, pay‑variable interest rate swap based on a yield curve denominated in a foreign currency. A Level 2 input would be the swap rate based on a yield curve denominated in a foreign currency that is observable at commonly quoted intervals for substantially the full term of the swap [Refer:paragraph 82]. That would be the case if the term of the swap is 10 years and that rate is observable at commonly quoted intervals for 9 years, provided that any reasonable extrapolation of the yield curve for year 10 would not be significant to the fair value measurement of the swap in its entirety.

(c)

Receive‑fixed, pay‑variable interest rate swap based on a specific bank’s prime rate. A Level 2 input would be the bank’s prime rate derived through extrapolation if the extrapolated values are corroborated by observable market data [Refer:paragraph 82(d)], for example, by correlation with an interest rate that is observable over substantially the full term of the swap.

(d)

Three‑year option on exchange‑traded shares. A Level 2 input would be the implied volatility for the shares derived through extrapolation to year 3 if both of the following conditions exist:

(i)

Prices for one‑year and two‑year options on the shares are observable.

(ii)

The extrapolated implied volatility of a three‑year option is corroborated by observable market data for substantially the full term of the option. [Refer:paragraph 82(d)]

In that case the implied volatility could be derived by extrapolating from the implied volatility of the one‑year and two‑year options on the shares and corroborated by the implied volatility for three‑year options on comparable entities’ shares, provided that correlation with the one‑year and two‑year implied volatilities is established.

(e)

Licensing arrangement. For a licensing arrangement that is acquired in a business combination and was recently negotiated with an unrelated party by the acquired entity (the party to the licensing arrangement), a Level 2 input would be the royalty rate in the contract with the unrelated party at inception of the arrangement.

(f)

Finished goods inventory at a retail outlet. For finished goods inventory that is acquired in a business combination, a Level 2 input would be either a price to customers in a retail market or a price to retailers in a wholesale market, adjusted for differences between the condition and location of the inventory item [Refer:paragraph 83(a)] and the comparable (ie similar) inventory items [Refer:paragraph 83(b)] so that the fair value measurement reflects the price that would be received in a transaction to sell the inventory to another retailer that would complete the requisite selling efforts. Conceptually, the fair value measurement will be the same, whether adjustments are made to a retail price (downward) or to a wholesale price (upward). Generally, the price that requires the least amount of subjective adjustments should be used for the fair value measurement.

(g)

Building held and used. A Level 2 input would be the price per square metre for the building (a valuation multiple) derived from observable market data, eg multiples derived from prices in observed transactions involving comparable (ie similar) buildings in similar locations. [Refer:paragraph 83]

(h)

Cash‑generating unit. A Level 2 input would be a valuation multiple (eg a multiple of earnings or revenue or a similar performance measure) derived from observable market data, eg multiples derived from prices in observed transactions involving comparable (ie similar) businesses, taking into account operational, market, financial and non‑financial factors. [Refer:paragraph 83]

Level 3 inputs (paragraphs 86⁠–⁠90)

B36

Examples of Level 3 inputs for particular assets and liabilities include the following:

(a)

Long‑dated currency swap. A Level 3 input would be an interest rate in a specified currency that is not observable and cannot be corroborated by observable market data at commonly quoted intervals or otherwise for substantially the full term of the currency swap. The interest rates in a currency swap are the swap rates calculated from the respective countries’ yield curves.

Interest rate, measurement input [member] Example 823000

(b)

Three‑year option on exchange‑traded shares. A Level 3 input would be historical volatility, ie the volatility for the shares derived from the shares’ historical prices. Historical volatility typically does not represent current market participants’ expectations about future volatility, even if it is the only information available to price an option.

Historical volatility for shares, measurement input [member] Example 823000

(c)

Interest rate swap. A Level 3 input would be an adjustment to a mid‑market consensus (non‑binding) price for the swap developed using data that are not directly observable and cannot otherwise be corroborated by observable market data.

Adjustment to mid-market consensus price, measurement input [member] Example 823000

(d)

Decommissioning liability assumed in a business combination. [Refer:IFRS 3] A Level 3 input would be a current estimate using the entity’s own data about the future cash outflows to be paid to fulfil the obligation (including market participants’ expectations about the costs of fulfilling the obligation and the compensation that a market participant would require for taking on the obligation [Refer:paragraphs B31⁠–⁠B33] to dismantle the asset) if there is no reasonably available information that indicates that market participants would use different assumptions. That Level 3 input would be used in a present value technique [Refer:paragraphs B12⁠–⁠B30] together with other inputs, eg a current risk‑free interest rate or a credit‑adjusted risk‑free rate if the effect of the entity’s credit standing [Refer:paragraph 43] on the fair value of the liability is reflected in the discount rate rather than in the estimate of future cash outflows.

Current estimate of future cash outflows to be paid to fulfil obligation, measurement input [member] Example 823000

(e)

Cash‑generating unit. A Level 3 input would be a financial forecast (eg of cash flows or profit or loss) developed using the entity’s own data if there is no reasonably available information that indicates that market participants would use different assumptions. [Refer:paragraph 89 and Basis for Conclusions paragraphs BC174⁠–⁠BC175]

Financial forecast of cash inflows (outflows) for cash-generating unit, measurement input [member] Example 823000
Financial forecast of profit (loss) for cash-generating unit, measurement input [member] Example 823000

Measuring fair value when the volume or level of activity for an asset or a liability has significantly decreased

B37

The fair value of an asset or a liability might be affected when there has been a significant decrease in the volume or level of activity for that asset or liability in relation to normal market activity for the asset or liability (or similar assets or liabilities). [Refer:Illustrative Examples, example 14] To determine whether, on the basis of the evidence available, there has been a significant decrease in the volume or level of activity for the asset or liability, an entity shall evaluate the significance and relevance of factors such as the following:

(a)

There are few recent transactions.

(b)

Price quotations are not developed using current information.

(c)

Price quotations vary substantially either over time or among market‑makers (eg some brokered markets).

(d)

Indices that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability. [Refer:paragraph 82(d)]

(e)

There is a significant increase in implied liquidity risk premiums, [Refer:paragraphs B15 and B16] yields or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the entity’s estimate of expected cash flows, [Refer:paragraphs B23⁠–⁠B30] taking into account all available market data about credit and other non‑performance risk for the asset or liability.

(f)

There is a wide bid‑ask spread or significant increase in the bid‑ask spread. [Refer:paragraphs 70 and 71]

(g)

There is a significant decline in the activity of, or there is an absence of, a market for new issues (ie a primary market) for the asset or liability or similar assets or liabilities.

(h)

Little information is publicly available (eg for transactions that take place in a principal‑to‑principal market).

B38

If an entity concludes that there has been a significant decrease in the volume or level of activity for the asset or liability in relation to normal market activity for the asset or liability (or similar assets or liabilities), further analysis of the transactions or quoted prices is needed. A decrease in the volume or level of activity on its own may not indicate that a transaction price or quoted price does not represent fair value or that a transaction in that market is not orderly. However, if an entity determines that a transaction or quoted price does not represent fair value (eg there may be transactions that are not orderly), an adjustment to the transactions or quoted prices will be necessary if the entity uses those prices as a basis for measuring fair value and that adjustment may be significant to the fair value measurement in its entirety. [Refer:paragraphs 72, 73 and 75] Adjustments also may be necessary in other circumstances (eg when a price for a similar asset requires significant adjustment to make it comparable to the asset being measured [Refer:paragraph 83(b)] or when the price is stale [Refer:paragraph 83(c)]).

B39

This IFRS does not prescribe a methodology for making significant adjustments to transactions or quoted prices. See paragraphs 61⁠–⁠66 and B5⁠–⁠B11 for a discussion of the use of valuation techniques when measuring fair value. Regardless of the valuation technique used, an entity shall include appropriate risk adjustments, [Refer:paragraphs 64, 88, B15, B16 and Basis for Conclusions paragraphs BC143⁠–⁠BC146, BC149 and BC150] including a risk premium reflecting the amount that market participants would demand as compensation for the uncertainty inherent in the cash flows of an asset or a liability (see paragraph B17). Otherwise, the measurement does not faithfully represent fair value. In some cases determining the appropriate risk adjustment might be difficult. [Refer:Basis for Conclusions paragraph BC150] However, the degree of difficulty alone is not a sufficient basis on which to exclude a risk adjustment. The risk adjustment shall be reflective of an orderly transaction between market participants at the measurement date under current market conditions. [Refer:Basis for Conclusions paragraphs BC143⁠–⁠BC146]

B40

If there has been a significant decrease in the volume or level of activity for the asset or liability, a change in valuation technique [Refer:paragraph 65] or the use of multiple valuation techniques may be appropriate (eg the use of a market approach and a present value technique). When weighting indications of fair value resulting from the use of multiple valuation techniques, an entity shall consider the reasonableness of the range of fair value measurements. The objective is to determine the point within the range that is most representative of fair value under current market conditions. A wide range of fair value measurements may be an indication that further analysis is needed. [Refer:Basis for Conclusions paragraphs BC147 and BC148]

B41

Even when there has been a significant decrease in the volume or level of activity for the asset or liability, the objective of a fair value measurement remains the same [Refer:paragraph 2]. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (ie not a forced liquidation or distress sale) between market participants at the measurement date under current market conditions.

B42

Estimating the price at which market participants would be willing to enter into a transaction at the measurement date under current market conditions if there has been a significant decrease in the volume or level of activity for the asset or liability depends on the facts and circumstances at the measurement date and requires judgement. An entity’s intention to hold the asset or to settle or otherwise fulfil the liability is not relevant when measuring fair value because fair value is a market‑based measurement, not an entity‑specific measurement. [Refer:paragraph 3]

Identifying transactions that are not orderly

B43

The determination of whether a transaction is orderly [Refer:paragraph 15] (or is not orderly) is more difficult if there has been a significant decrease in the volume or level of activity for the asset or liability in relation to normal market activity for the asset or liability (or similar assets or liabilities). [Refer:paragraph B37] In such circumstances it is not appropriate to conclude that all transactions in that market are not orderly (ie forced liquidations or distress sales). [Refer:Basis for Conclusions paragraph BC181] Circumstances that may indicate that a transaction is not orderly include the following:

(a)

There was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions.

(b)

There was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant. [Refer:paragraphs 22 and 23]

(c)

The seller is in or near bankruptcy or receivership (ie the seller is distressed).

(d)

The seller was required to sell to meet regulatory or legal requirements (ie the seller was forced).

(e)

The transaction price is an outlier when compared with other recent transactions for the same or a similar asset or liability.

An entity shall evaluate the circumstances to determine whether, on the weight of the evidence available, the transaction is orderly.

B44

An entity shall consider all the following when measuring fair value or estimating market risk premiums: [Refer:paragraphs B15 and B16]

(a)

If the evidence indicates that a transaction is not orderly, an entity shall place little, if any, weight [Refer:paragraph 63] (compared with other indications of fair value) on that transaction price.

(b)

If the evidence indicates that a transaction is orderly, an entity shall take into account that transaction price. The amount of weight [Refer:paragraph 63] placed on that transaction price when compared with other indications of fair value will depend on the facts and circumstances, such as the following:

(i)

the volume of the transaction.

(ii)

the comparability of the transaction to the asset or liability being measured.

(iii)

the proximity of the transaction to the measurement date.

(c)

If an entity does not have sufficient information to conclude whether a transaction is orderly, it shall take into account the transaction price. However, that transaction price may not represent fair value (ie the transaction price is not necessarily the sole or primary basis for measuring fair value or estimating market risk premiums). When an entity does not have sufficient information to conclude whether particular transactions are orderly, the entity shall place less weight [Refer:paragraph 63] on those transactions when compared with other transactions that are known to be orderly.

An entity need not undertake exhaustive efforts to determine whether a transaction is orderly, but it shall not ignore information that is reasonably available. When an entity is a party to a transaction, it is presumed to have sufficient information to conclude whether the transaction is orderly.

Using quoted prices provided by third parties

B45

This IFRS does not preclude the use of quoted prices provided by third parties, such as pricing services or brokers, [Refer:paragraph B34(c)] if an entity has determined that the quoted prices provided by those parties are developed in accordance with this IFRS.

B46

If there has been a significant decrease in the volume or level of activity for the asset or liability, [Refer:paragraph B37] an entity shall evaluate whether the quoted prices provided by third parties are developed using current information that reflects orderly transactions or a valuation technique that reflects market participant assumptions (including assumptions about risk [Refer:paragraphs 88, B15 and B16]). In weighting a quoted price as an input to a fair value measurement, an entity places less weight [Refer:paragraph 63] (when compared with other indications of fair value that reflect the results of transactions) on quotes that do not reflect the result of transactions.

B47

Furthermore, the nature of a quote (eg whether the quote is an indicative price or a binding offer) shall be taken into account when weighting the available evidence, with more weight given to quotes provided by third parties that represent binding offers.

Appendix CEffective date and transition

This appendix is an integral part of the IFRS and has the same authority as the other parts of the IFRS.

C1

An entity shall apply this IFRS for annual periods beginning on or after 1 January 2013. Earlier application is permitted. If an entity applies this IFRS for an earlier period, it shall disclose that fact. [Refer:Basis for Conclusions paragraphs BC227 and BC228]

C2

This IFRS shall be applied prospectively as of the beginning of the annual period in which it is initially applied. [Refer:Basis for Conclusions paragraph BC229]

C3

The disclosure requirements of this IFRS need not be applied in comparative information provided for periods before initial application of this IFRS. [Refer:Basis for Conclusions paragraph BC230]

C4

Annual Improvements Cycle 2011⁠–⁠2013 issued in December 2013 amended paragraph 52. An entity shall apply that amendment for annual periods beginning on or after 1 July 2014. An entity shall apply that amendment prospectively from the beginning of the annual period in which IFRS 13 was initially applied. [Refer:Basis for Conclusions paragraph BC230A] Earlier application is permitted. If an entity applies that amendment for an earlier period it shall disclose that fact.

C5

IFRS 9, as issued in July 2014, amended paragraph 52. An entity shall apply that amendment when it applies IFRS 9.

C6

IFRS 16 Leases, issued in January 2016, amended paragraph 6. An entity shall apply that amendment when it applies IFRS 16.

Appendix DAmendments to other IFRSs

This appendix sets out amendments to other IFRSs that are a consequence of the Board issuing IFRS 13. An entity shall apply the amendments for annual periods beginning on or after 1 January 2013. If an entity applies IFRS 13 for an earlier period, it shall apply the amendments for that earlier period. Amended paragraphs are shown with new text underlined and deleted text struck through.

* * * * *

The amendments contained in this appendix when this IFRS was issued in 2011 have been incorporated into the relevant IFRSs published in this volume.

Board Approvals

Approval by the Board of IFRS 13 issued in May 2011

International Financial Reporting Standard 13 Fair Value Measurement was approved for issue by the fifteen members of the International Accounting Standards Board.

Sir David TweedieChairman
Stephen Cooper
Philippe Danjou
Jan Engström
Patrick Finnegan
Amaro Luiz de Oliveira Gomes
Prabhakar Kalavacherla
Elke König
Patricia McConnell
Warren J McGregor
Paul Pacter
Darrel Scott
John T Smith
Tatsumi Yamada
Wei-Guo Zhang

Footnotes

1

In this IFRS monetary amounts are denominated in ‘currency units (CU)’. (back)