First Published: IFRS Boutique
Date: October 2017
By: Chris Ragkavas, BA, MA, FCCA, CGMA
StudySmart management consultant, senior finance & accounting tutor, IFRS technical expert.
Primarily, entities must use market derived (Level 1, or Level 2, observable) inputs to calculate the fair value of the element at stake. When this is not possible, (Level 3, unobservable) inputs must be used. In any case, the inputs must be developed from the viewpoint of the market participants, i.e. the entity must make the same assumptions as the one that market participants would make [IFRA 13: Appendix A].
Entities must use techniques that are appropriate in the circumstances and for which sufficient data are available. The entity must minimize the use of unobservable inputs and must maximize the use of relevant observable inputs [IFRS 13:61].
IFRS 13, Fair value measurement-the essentials. Part I - READ MORE