5.1 Quiz fair value measurement assets.pptx

7/27/2019 5.1 Quiz fair value measurement assets.pptx

1/17

International Financial Reporting Standards

The views expressed in this presentation are those of the

presenter,

not necessarily those of the IASB or IFRS Foundation.

IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

Quiz:Assets: fair value

measurementJoint World Bank and IFRS Foundation

train the trainers workshop hosted by the

ECCB, 30 April to 4 May 2012

The views expressed in this presentation are those of the

presenter, not necessarily those of the IASB or IFRS

Foundation.


2/17

2Quiz: Assets fair value measurement

Question 1: Which of the following is NOTrelevant when measuring the fair value of an

asset?

a. Whether the asset is sold in an orderly

transaction

b. The intention of an entity for holding an asset

c. The measurement date/current price of the

assetd. Whether the sale occurred between market

participants

e. None of the above IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK | www.ifrs.org


3/17


Question 1: Which of the following is NOTrelevant when measuring the fair value of an

asset?

a. Whether the asset is sold in an orderly

transaction

b. The intention of an entity for holding an asset

c. The measurement date/current price of the

assetd. Whether the sale occurred between market

participants

e. None of the above IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK | www.ifrs.org


4/17


Question 2: Which of the following areexamples of transaction costs in accordance

with IFRS 13?

a. transport costs

b. transfer duty

c. finance costs

IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK | www.ifrs.org


5/17


Question 2: Which of the following areexamples of transaction costs in accordance

with IFRS 13?

a. transport costsb. transfer duty

c. finance costs



6/17


Question 3: In measuring the pr ice (or fairvalue) in an orderly transaction, how should an

entity account for transaction costs?

a. adjust fair value for transaction costs

b. ignore transaction costs when measuring fair

value

c. the decision is asset-specific



7/17


Question 3: In measuring the pr ice (or fairvalue) in an orderly transaction, how should an

entity account for transaction costs?

a. adjust fair value for transaction costs

b. ignore transaction costs when measuring fair

value

c. the decision is asset-specific



8/17


Question 4: When measuring the fair value of anon-financial asset, reference must be made to thehighest and best use of the asset. Which of thefollowing statements are true about the highest andbest use of the asset?

a. the use must be physically possible, legallypermissible and financially feasible

b. the highest and best use is determined from the

perspective of market participants, only if the entity

intends to use the asset in its operationsc. the highest and best use is determined from the

perspective of market participants, regardless of

whether the entity intends to use the asset

d. a. and c. IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK | www.ifrs.org


9/17


Question 4: When measuring the fair value of anon-financial asset, reference must be made to thehighest and best use of the asset. Which of thefollowing statements are true about the highest andbest use of the asset?

a. the use must be physically possible, legallypermissible and financially feasible

b. the highest and best use is determined from the

perspective of market participants, only if the entity

intends to use the asset in its operationsc. the highest and best use is determined from the

perspective of market participants, regardless of

whether the entity intends to use the asset

d. a. and c. IFRS Foundation | 30 Cannon Street | London EC4M 6XH | UK | www.ifrs.org


10/17


Question 5: The assessment of the fair value ofan entitys financial instruments includes

observable market information for a similar

instrument and our own assumptions.

In what level would this be categorised?

a. Level 1b. Level 2

c. Level 3



11/17


Question 5:In what level would this be categorised?

a. Level 1

b. Level 2 OR

c. Level 3

If the valuation technique uses inputs from multiple levels of the fair

value hierarchy, the lowest level of significant inputdetermines thelevel of the entire fair value measurement in the hierarchy.

The appropriate level depends on the significance to the overall

measurement of the companys own assumptions.



12/17


Question 6: How would you categorise thefollowing?


Unit 1:

A unit in an investment fund is quoted in

an active market. However theunderlying investments are in unquoted

equities that would be categorised within

Level 3 in the fair value hierarchy.

Unit 2:

A unit in a non-quoted investment fund

which only invests in financial assetsquoted in active markets. No

adjustments are made to the quoted

prices when arriving at the value of the

fund.

Unit 1 Unit 2

A. Level 1 Level 1

B. Level 1 Level 2

C. Level 2 Level 1

D. Level 3 Level 2


13/17


Question 6: How would you categorise thefollowing?


b. Level 1 and Level 2

Unit 1:

Level 1.

This is because the funds units are

quoted in an active market.

Unit 2:

Level 2.

Although the funds investments are

quoted, the funds own units are not.


14/17

2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org

14

Question 7

A building is used as a factory but is in a newly residential area. Other industrial

and commercial buildings have been converted into residential use in the area.

Based on expected future cash flows from use as a factory, the entity estimates

a value of CU20m. However, the building could be sold for conversion toresidential property for CU21m, incurring transaction costs of CU1.5m (surveys,

fees etc). Prior to sale, the building would require repairs costing CU500k to

return site to safe for human dwelling.

What is the Fair Value of the building?

a. CU19m

b. CU19.5m

c. CU20.5m

d. CU21m

Quiz: Assets fair value measurement



15/17

2011 IFRS Foundation. 30 Cannon Street | London EC4M 6XH | UK. www.ifrs.org


c. CU20.5m

Highest and Best Use is the highest value achieved through either current or

alternative use. The value is calculated net of repair cost but not transaction costs.


Question 7


16/17

16Questions or comments?

Expressions of individual viewsby members of the IASB and its

staff are encouraged.

The views expressed in this

presentation are those of the

presenter.

Official positions of the IASB on

accounting matters are

determined only after extensive

due process and deliberation.



17/17


17

The requirements are set out in International FinancialReporting Standards (IFRSs), as issued by the IASB at1 January 2012 with an effective date after 1 January2012 but not the IFRSs they will replace.

The IFRS Foundation, the authors, the presenters andthe publishers do not accept responsibility for losscaused to any person who acts or refrains from actingin reliance on the material in this PowerPointpresentation, whether such loss is caused by

negligence or otherwise.

17

Documents

5.1 Quiz fair value measurement assets.pptx