The definition of fair value requires that an asset be sold or a liability

The definition of fair value requires that an asset

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The definition of fair value requires that an asset be sold or a liability transferred in an orderly transaction .
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Orderly transaction = not a forced or distressed sale, such as occurs in liquidations. But a transaction where before the measurement date, there is sufficient time and exposure to a market to allow the usual marketing activities to take place for that transaction. IFRS 13 is clear that fair value remains a market-based exit price that considers the current market conditions as at the measurement date, even if there has been a significant decrease in the volume and level of activity for the asset or liability (paragraph 15). Therefore, paragraphs B37–B47 of Appendix B provide guidance to assist entities in measuring fair value when the volume or level of activity for an asset or a liability has significantly decreased. 3.2.3 Transaction and transportation costs. Both transaction and transport costs affect the determination of the fair value of an asset or liability. However, the price used to measure fair value is not adjusted for transaction costs, but would consider transportation costs. Transaction costs = the incremental direct costs, that are essential to the transaction, to sell an asset or transfer a liability and are defined as the costs that would be incurred in the principal (or most advantageous) market and are directly attributable to the sale or transfer. Incremental costs would not otherwise have been incurred had the entity not decided to enter into the transaction to sell or transfer. Transportation costs = would be incurred to move the asset to the principal (or most advantageous) market. The fair value of an asset or liability is not adjusted for transaction costs. The reason for this is that transaction costs are not considered to be a characteristic of the asset or liability . Instead they are specific to a transaction and will change from transaction to transaction. A price in the principal (or most advantageous) market do is adjusted for the transport costs. When measuring fair value an entity needs to determine all of the following: - The particular asset or liability that is the subject of the measurement (consistent with its unit of account); - For a non-financial asset, the valuation premise that is appropriate for the measurement (consistent with its highest and best use); - The principal (or most advantageous) market for the asset or liability; - The valuation technique(s) appropriate for the measurement, considering the available inputs that represent market participants assumptions and their categorization within the fair value hierarchy. 3.3.1 What is the particular asset or liability that is the subject of the measurement? Some of the key questions that need to be asked when determining the asset or liability to be measured are: What is the unit of account?
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