Fair value measurement参考.ppt

* * * * * * * * * * * * * * * * * * * * * * * * Chapter 5 Fair value measurement Prepared by Emma Holmes In September 2011 AASB 13 Fair Value Measurement was issued AASB 13 is a new standard which provides a consistent definition of fair value to be applied across all other accounting standards. Prior to the introduction of AASB 13 different standards had their own definition of fair value. The main objectives of AASB 13 are: To define fair value To establish a framework for measuring fair value To require disclosures about fair value measurement A standard on fair value measurement Prior to the release of AASB 13 the OLD definition of fair value was: “...The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.” The NEW definition of fair value in AASB 13 is as follows: “...the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Definition of fair value Exit price The exit price is defined as: “...The price that would be received to sell an asset or paid to transfer a liability” The exit price is based on the perspective of the holder The exit price is based on expectations about future cash flows that will be generated by the asset/liability subsequent to the sale/transfer This is the case even where the holder intends on holding the asset/liability Elements of the definition Orderly transactions Refers to transactions made under normal market conditions Excludes sales made under liquidation or “fire sale” conditions Excludes non-arms length sales Market participants Must be independent from each other Must be knowledgeable about the asset or liability Must have the ability to enter into the transaction Must not be forced or compelled Elements of the definition Transaction and transport costs Transactions costs are incremental direct costs that would no