What is Fair value hierarchy levels under IFRS 13?

Monday, December 16, 2013

www.ChartAcc.com - IFRS 13 defines hierarchy to determine Fair Values for measurement and disclosure purposes.

Three levels of hierarchy are categorised as follows:

  1. Level 1 - Quoted prices:
    • These are observable prices 
    • available in Active Markets (Click for definition)
    • for identical assets or liabilities 
    • that the entity can access at the measurement date.
  2. Level 2 - Unquoted but Observable prices:
    • These are unquoted market prices (i.e. other than above, Level 1) 
    • observable; either directly or indirectly 
    • with quoted prices of:
      • similar assets or liabilities in Active Markets
      • identical or similar assets or liabilities in markets that are not active
    • with unquoted prices that are:
      •  observable for the asset or liability
      • derived from observable market data by correlation or other methods. 
  3. Level 3 - Unobservable prices:
    • These are prices for which observable inputs are not available and 
    • derived from:
      • assumptions 
      • similar circumstances 
      • market participants.

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More about IFRS 13

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