IFRS 13 Fair Value Measurement

Hosted by Ernst & Young's Global IFRS Services

In May 2011, the IASB issued IFRS 13 Fair Value Measurement. This new standard establishes a single source for fair value measurements under IFRS and converges with US GAAP, which was amended concurrently. This new standard does not change when an entity is required to use fair value, but rather, how to measure fair value under IFRS. It applies to both financial assets and liabilities and non-financial assets and liabilities.

Our experienced panelists, including Elke König from the IASB, Jim Eales (Ernst & Young LLP UK) and Kevin Kispert (Ernst & Young LLP US), will explain the new model and provide insight into practical issues including:

• Non-financial assets: management must consider the highest and best use of the asset by market participants. While this has often been considered when valuing assets acquired in a business combination, it may not have been considered when re-valuing property, plant and equipment or investment property.
• The prohibition on blockage discounts: this will be a change in practice for entities that consider the size of their specific holdings when valuing Level 2 and 3 instruments.
• Fair value determination based on the exit price in the principal market for the asset or liability. The 'principal market' is based on market volume, not entity-specific volume. This could pose challenges for entities with holdings of agricultural produce.

We hope you can join us for the discussion of this important new accounting standard.