Valuation techniques under IFRS 13 Fair Value Measurement

Tuesday, December 17, 2013 - To measure Fair value under IFRS 13 Purpose of tecniques to be used is as follows:

  • Sufficient data should be available that 
  • maximises the use of relevant observable inputs and 
  • minimises the use of unobservable inputs.

Three techniques to measure Fair value are as follows:
  1. Market approach:
    • Prices and other related information 
    • generated by market transactions 
    • involving identical / comparable / similar assets and liabilities or a group of assets and liabilities.
  2. Cost approach:
    • Amount that would be required currently to replace the service capacity of an asset 
    • Particularly called Current Replacement Cost
  3. Income approach:
    • Present value (Discounted price)
    • of future amounts (cash flows or income less expenses)
    • that reflects current market expectations.
Above techniques can be for single or multiple valuations collectively wherever appropriate.

Read more here:

More about IFRS 13

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