Topic 8 - FV Accounting.ppt - FAIR VALUE ACCOUNTING...

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1 Learning Outcomes: Understand the key characteristics of the term ‘fair value’ Understand the key concepts used in fair value framework Explain the steps in determining the fair value of non-financial assets Understand how to measure the fair value of liabilities & an entity’s own equity instruments FAIR VALUE ACCOUNTING
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2 Assets Assets Intangible Financial Inv Property PP&E Inventory Etc Defined Benefit Biological assets Cost CM or RM CM or RM Cost Nil Nil Lower o f C o r NRV some FVM Cost Cost CM or FVM Fair value AmC o r FVM Fair value less costs to sell Fair value less costs to sell FV plan assets less PUC plan obligation & arbitrary rules FV plan assets less PUC plan obligation & arbitrary rules Various Various Classification, recognition and measurement
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© 2010 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. 3 ASSET TYPE MEASUREMENT AT INITIAL RECOGNITION MODEL BASED ON FAIR VALUE BASIS OF IMPAIRMENT TEST IFRS 9 Financial Instruments Fair value For specified financial assets and for particular business models: fair value IAS 16 Property, Plant and Equipment Purchase costs + construction costs + costs to bring to the location and condition necessary to be capable of operating in the manner intended by management. Accounting policy choice: revaluation model Compare carrying amount to recoverable amount. Recoverable amount is greater of value in use and fair value less disposal costs (IAS 36) IAS 38 Intangible Assets Purchase costs + development costs + costs to bring to the location and condition necessary to be capable of operating as intended by management Accounting policy choice: revaluation model IAS 40 Investment Property Cost including transaction costs Accounting policy choice: fair value IAS 41 Agriculture Fair value less costs to sell Fair value less costs to sell
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Previous definition of fair value (FV) The amount for which an asset could be exchanged , or a liability settled , between knowledgeable, willing parties in an arm’s length transaction.
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