Introduction

In this lesson

1. 0:00 Fair value measurement introduction
2. 0:13 IFRS 13 definition and scope
3. 0:42 Fair value key concepts explained
4. 1:10 Active markets and exit pricing
5. 1:43 Determining fair value framework

About this lesson

Understanding these foundations is essential for applying fair value measurement across Financial Reporting, Strategic Business Reporting, and Advanced Financial Reporting papers, where you'll need to measure and disclose assets and liabilities accurately. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between knowledgeable market participants. It's not entity-specific; it reflects what the market would pay, not what a particular company might value something at internally. The standard requires you to consider the asset's condition, location, and any restrictions on its use, and to distinguish between measurements in active markets (where transactions happen frequently) and those requiring other valuation techniques. IFRS 13 applies whenever another standard requires or permits fair value measurement, with specific exceptions for share-based payments, leases, and measurements like net realisable value for inventory or value in use. By mastering these core concepts now, you'll be better equipped to handle the more complex valuation techniques and fair value hierarchies that follow, and to tackle exam questions with confidence.

Duration: 2m