AC2101 S1 2014 Seminar 2.pptx

1 yes 2 no 17 up till this point weve been covering

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Unformatted text preview: of Trades 30 12 Price 26 25 Transport Cost 2 2 Possible Fair Value 24 23 Transaction Cost 3 1 Net Proceeds 21 22 §༊  Which is the Most Advantageous Market? §༊  What is the fair value in this case? Hint: price is adjusted for transportation costs but not transaction costs (FRS 113 para 25) 12 6 FRS 113 – Fair Value Measurement §༊ Valuation Techniques • Price can be directly observable or estimated using valuation technique but valuation technique should maximize (minimize) use of relevant observable (unobservable) inputs •  Market approach •  Cost approach •  Income approach 13 FRS 113 – Fair Value Measurement §༊ Valuation Techniques •  Inputs to valuation techniques are categorized into 3 levels known as the FAIR VALUE HIERARCHY: Ø། Level 1 inputs = unadjusted quoted prices in accessible active markets for identical assets/liabilities Ø། Level 2 inputs = inputs other than Level 1 that are directly/ indirectly observable Ø། Level 3 inputs = unobservable inputs 14 7 FRS 113 – Fair Value Measurement §༊ Valuation Techniques •  Disclose info to users for assessing Ø། The valuation techniques & inputs used to develop FV measurements Ø། For recurring FV measurements using Level 3 inputs significantly, their effect on P/L...
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This document was uploaded on 02/10/2014.

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