Wiley 2022 Interpretation and Application of IFRS Standards

25FAIR VALUE

• Introduction
• Scope
• Definitions of Terms
• Fair Value Measurement Principles and Methodologies
  • Item Identification and Unit of Account
  • The Principal or Most Advantageous Market
  • Market Participants
  • Selection of the Valuation Premise for Asset Measurements
  • Risk Assumptions When Valuing a Liability
  • Liabilities and Equity Instruments Held by Other (Third) Parties as an Asset
  • Liabilities and Equity Instruments Not Held by Other (Third) Parties as an Asset
  • Measurement Considerations
• Fair Value Disclosure
• Future Developments
• US GAAP Comparison

INTRODUCTION

Financial statement preparers, users, auditors, standard setters and regulators have long engaged in a debate regarding the relevance, transparency and decision-usefulness of financial statements prepared under IFRS, which is one among the various families of comprehensive financial reporting standards that rely on what has been called the “mixed attribute” model for measuring assets and liabilities. That is, existing IFRS imposes a range of measurement requirements, including both historical (i.e., transaction-based) cost and a variety of approximations to current economic values, for the initial and subsequent reporting of the assets and liabilities that define the reporting entity's financial position and, indirectly, for the periodic determination of its results of operations.

While current fair or market value data have become more readily obtainable, some of these measures do exhibit some degree of volatility, ...