Accounting Alerts

Insights into PFRS 13 - Fair Value Measurement

This Accounting Alert is issued to give insights on PFRS 13, Fair Value Measurement and to provide detailed commentary on various aspects of applying this standard from the perspective of a preparer working alongside a valuation expert.

Overview

PFRS 13 ‘Fair Value Measurement’ explains how to measure fair value by providing clear definitions and introducing a single set of requirements for almost all fair value measurements. It clarifies how to measure fair value when a market becomes less active. PFRS 13 applies to both financial and non-financial items but does not address or change the requirements on when fair value should be used.

This Insights into PFRS 13 article not only summarizes the Standard, it also provides detailed commentary on various aspects of applying this Standard from the perspective of a preparer working alongside a valuation expert.

Summary of PFRS 13

The table summarizes the main requirements of the Standard:

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The Accounting Alert also provides detailed discussion of the Standard as to its requirements i.e., scope, definition, measurement approach, valuation technique, and disclosure. It also discusses several examples of fair value measurement within the scope of PFRS 13, transaction price and "day one" fair values, consideration of a reference market, guidance on inactive markets, application and valuation premise for non-financial asset, and other related topics.