Presentation by CA Varun Sethi:
Explains through flowboxes - IndAS 113 - Fair Value Measurements:
1. Scope & Key Concepts
2. Fair Value definition
3. Fair Value framework
4. Fair Value Hierarchy
CA Varun Sethi Ind AS 20 - Accounting for Government GrantsVarun Sethi
Presentation by CA Varun Sethi: Indian Financial Reporting:
IndAS 20*: Accounting for Government Grants (GG) and disclosure for government assistance
Presentation includes comparison of Ind AS 20 issued by ICAI, (converged with IAS 20 issued by IASB), with AS 12, with IAS 20, and with ICDS (Income computation and accounting standards) on Government Grants
Sectors Impacted:
1. Corporates who enjoy Export related interest rate subvention on bank loans (Eg. Sugar/ Rice industries)
2. Non profit sector,
3. Companies enjoying government investment subsidies (Central investment subsidy scheme etc)
CA Varun Sethi Ind AS 20 - Accounting for Government GrantsVarun Sethi
Presentation by CA Varun Sethi: Indian Financial Reporting:
IndAS 20*: Accounting for Government Grants (GG) and disclosure for government assistance
Presentation includes comparison of Ind AS 20 issued by ICAI, (converged with IAS 20 issued by IASB), with AS 12, with IAS 20, and with ICDS (Income computation and accounting standards) on Government Grants
Sectors Impacted:
1. Corporates who enjoy Export related interest rate subvention on bank loans (Eg. Sugar/ Rice industries)
2. Non profit sector,
3. Companies enjoying government investment subsidies (Central investment subsidy scheme etc)
International Financial Reporting Standards, commonly called IFRS, are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board
CA Varun Sethi - IndAS 113 - Fair Value MeasurementsVarun Sethi
Presentation by CA Varun Sethi:
Explains through flowboxes - IndAS 113 - Fair Value Measurements:
1. Scope & Key Concepts
2. Fair Value definition
3. Fair Value framework
4. Fair Value Hierarchy
International Financial Reporting Standards, commonly called IFRS, are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board
CA Varun Sethi - IndAS 113 - Fair Value MeasurementsVarun Sethi
Presentation by CA Varun Sethi:
Explains through flowboxes - IndAS 113 - Fair Value Measurements:
1. Scope & Key Concepts
2. Fair Value definition
3. Fair Value framework
4. Fair Value Hierarchy
Fair ValueExcerpt from FASB Accounting Standards Updates 8.docxmecklenburgstrelitzh
Fair Value
Excerpt from FASB Accounting Standards Updates 820
DEFINITION OF FAIR VALUE
the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under the current market condition.
PRICE TO SELL:
Price to sell at the principal market or in the absence of the principal market the most advantageous market.
don’t subtract selling costs because they are transaction specific not assets or liabilities
but add transportation costs
principal market is “the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability.”
A fair value measurement is for a particular asset or liability.
Therefore, the measurement should consider attributes specific to the asset or liability.
Such attributes include, for example, the following:
a. The condition and/or location of the asset or liability
b. Restrictions, if any, on the sale or use of the asset at the measurement date
Transactions
A fair value measurement assumes that the asset or liability is exchanged in an orderly transaction between market participants
The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability.
MARKET PARTICIPANTS:
assuming that market participants act in their economic best interest.
But a reporting entity need not identify specific market participants.
Rather, the reporting entity shall identify characteristics that distinguish market participants generally, considering factors specific to all of the following:
a. The asset or liability
b. The principal (or most advantageous) market for the asset or liability
c. Market participants with whom the reporting entity would enter into a transaction in that market.
APPLICATION TO NONFINANCIAL ASSETS
A fair value measurement assumes the highest and best use of the asset by market participants, considering the use of the asset that is physically possible, legally permissible, and financially feasible at the measurement date.
Highest and best use is determined based on the use of the asset by market participants, even if the intended use of the asset by the reporting entity is different.
A fair value measurement of a nonfinancial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
.
Fair ValueExcerpt from FASB Accounting Standards Updates 8.docxlmelaine
Fair Value
Excerpt from FASB Accounting Standards Updates 820
DEFINITION OF FAIR VALUE
the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under the current market condition.
PRICE TO SELL:
Price to sell at the principal market or in the absence of the principal market the most advantageous market.
don’t subtract selling costs because they are transaction specific not assets or liabilities
but add transportation costs
principal market is “the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability.”
A fair value measurement is for a particular asset or liability.
Therefore, the measurement should consider attributes specific to the asset or liability.
Such attributes include, for example, the following:
a. The condition and/or location of the asset or liability
b. Restrictions, if any, on the sale or use of the asset at the measurement date
Transactions
A fair value measurement assumes that the asset or liability is exchanged in an orderly transaction between market participants
The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability.
MARKET PARTICIPANTS:
assuming that market participants act in their economic best interest.
But a reporting entity need not identify specific market participants.
Rather, the reporting entity shall identify characteristics that distinguish market participants generally, considering factors specific to all of the following:
a. The asset or liability
b. The principal (or most advantageous) market for the asset or liability
c. Market participants with whom the reporting entity would enter into a transaction in that market.
APPLICATION TO NONFINANCIAL ASSETS
A fair value measurement assumes the highest and best use of the asset by market participants, considering the use of the asset that is physically possible, legally permissible, and financially feasible at the measurement date.
Highest and best use is determined based on the use of the asset by market participants, even if the intended use of the asset by the reporting entity is different.
A fair value measurement of a nonfinancial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
...
This article analyzes a current financial reporting and accounting issue regarding diversity in
financial reporting practice. Since the Financial Accounting Standards Board (FASB) first issued accounting
statement 157 Fair Value Measurements, entities have been required to measure investments at fair market
values. This included the requirement to categorize investments within a fair value hierarchy in preparation to
report such in the financial statements. To do this, the FASB allows companies to either categorize the
investment in the fair value hierarchy using three different input levels (Level 1, 2 and 3) or by estimating the
net asset value as a practical expedient. If the entity uses the practical expedient, the investment would be
placed within the fair value hierarchy based on whether the investment is redeemable with the investee at the
measurement date, never redeemable, or redeemable in the future. Based on this information, the investment
would be placed in either level 2 or 3 of the hierarchy. As a result, there is diversity in practice when estimating
the length of time in the near term the investment would be redeemed. This article reports the results of
evaluating how can the diversity in accounting practice related to how certain investments measured at net asset
value are categorized within the fair value hierarchy be resolved. The results of the qualitative research
conducted on the FASB proposal concluded that fourteen out of the eighteen public comment letters agreed
with FASB proposal that eliminating the requirements to classify these investments in the fair value hierarchy
would increase comparability in accounting practice among entities.
This article analyzes a current financial reporting and accounting issue regarding diversity in financial reporting practice. Since the Financial Accounting Standards Board (FASB) first issued accounting statement 157 Fair Value Measurements, entities have been required to measure investments at fair market values. This included the requirement to categorize investments within a fair value hierarchy in preparation to report such in the financial statements. To do this, the FASB allows companies to either categorize the investment in the fair value hierarchy using three different input levels (Level 1, 2 and 3) or by estimating the net asset value as a practical expedient. If the entity uses the practical expedient, the investment would be placed within the fair value hierarchy based on whether the investment is redeemable with the investee at the measurement date, never redeemable, or redeemable in the future. Based on this information, the investment would be placed in either level 2 or 3 of the hierarchy. As a result, there is diversity in practice when estimating the length of time in the near term the investment would be redeemed. This article reports the results of evaluating how can the diversity in accounting practice related to how certain investments measured at net asset value are categorized within the fair value hierarchy be resolved. The results of the qualitative research conducted on the FASB proposal concluded that fourteen out of the eighteen public comment letters agreed with FASB proposal that eliminating the requirements to classify these investments in the fair value hierarchy would increase comparability in accounting practice among entities.
CA Varun Sethi - ICAI IFRS training - IAS 17 & IAS 23 - Oct 2015Varun Sethi
Presentation by CA Varun Sethi at ICAI certificate course on IFRS/ IndAS - 2015
Covered
IAS 17/ IndAS 17 / IFRIC 4 - Leases and Embedded Leases
IAS 23/ IndAS 23 - Borrowing costs
Contains
1. Comparison with ICDS, AS, IAS
2. Updates from IASB - New standard on leases
3. Industry/ sector relevant practical questions, problems and solutions including first time adoption issues etc
Contains the India/ US/ IFRS financial reporting framework for various sectors/ entities for Lease transactions and borrowing costs.
CA Varun Sethi - ICAI IFRS training - IAS 17 & IAS 23 - Oct 2015Varun Sethi
Presentation by CA Varun Sethi at ICAI certificate course on IFRS/ IndAS - 2015
Covered
IAS 17/ IndAS 17 / IFRIC 4 - Leases and Embedded Leases
IAS 23/ IndAS 23 - Borrowing costs
Contains
1. Comparison with ICDS, AS, IAS
2. Updates from IASB - New standard on leases
3. Industry/ sector relevant practical questions, problems and solutions including first time adoption issues etc
Contains the India/ US/ IFRS financial reporting framework for various sectors/ entities for Lease transactions and borrowing costs.
CA Varun Sethi - ICAI IFRS training - IAS 17 & IAS 23 - Oct 2015Varun Sethi
Presentation by CA Varun Sethi at ICAI certificate course on IFRS/ IndAS - 2015
Covered
IAS 17/ IndAS 17 / IFRIC 4 - Leases and Embedded Leases
IAS 23/ IndAS 23 - Borrowing costs
Contains
1. Comparison with ICDS, AS, IAS
2. Updates from IASB - New standard on leases
3. Industry/ sector relevant practical questions, problems and solutions including first time adoption issues etc
Contains the India/ US/ IFRS financial reporting framework for various sectors/ entities for Lease transactions and borrowing costs.
CA Varun Sethi - IFRS trainings - IFRIC 12 - Accounting for service concessi...Varun Sethi
Presentation by CA Varun Sethi
The Presentation discusses the accounting framework for accounting by Grantors and Operators. Covered in detail is the IFRIC 12 - Accounting by Operators/ Concessionaires for Service concession arrangements (SCA).
The presentation also helps the reader understand the technical differences between leases- IAS 17/IFRIC 4/ SCA etc and suggests the appropriate accounting in case of BOT, BOO, ROT, Lease, 100% Divestment cases.
Industries Impacted
1. Non Utility generators - Solar and Wind companies/ Gencos
2. Infrastructure Companies - Toll Road, Seaport, Airport operators.
3. EPC (Engineering, procurement and Construction) companies.
4. Turnkey projects installation cos
CA Varun Sethi - IFRS trainings - IFRIC 12 - Accounting for service concessi...Varun Sethi
Presentation by CA Varun Sethi
The Presentation discusses the accounting framework for accounting by Grantors and Operators. Covered in detail is the IFRIC 12 - Accounting by Operators/ Concessionaires for Service concession arrangements (SCA).
The presentation also helps the reader understand the technical differences between leases- IAS 17/IFRIC 4/ SCA etc and suggests the appropriate accounting in case of BOT, BOO, ROT, Lease, 100% Divestment cases.
Industries Impacted
1. Non Utility generators - Solar and Wind companies/ Gencos
2. Infrastructure Companies - Toll Road, Seaport, Airport operators.
3. EPC (Engineering, procurement and Construction) companies.
4. Turnkey projects installation cos
CA Varun Sethi - IFRS trainings - IFRIC 12 - Accounting for service concessi...Varun Sethi
Presentation by CA Varun Sethi
The Presentation discusses the accounting framework for accounting by Grantors and Operators. Covered in detail is the IFRIC 12 - Accounting by Operators/ Concessionaires for Service concession arrangements (SCA).
The presentation also helps the reader understand the technical differences between leases- IAS 17/IFRIC 4/ SCA etc and suggests the appropriate accounting in case of BOT, BOO, ROT, Lease, 100% Divestment cases.
Industries Impacted
1. Non Utility generators - Solar and Wind companies/ Gencos
2. Infrastructure Companies - Toll Road, Seaport, Airport operators.
3. EPC (Engineering, procurement and Construction) companies.
4. Turnkey projects installation cos
CA Varun Sethi IndAS 115 - Revenue from contracts with customers - sale or ...Varun Sethi
CA Varun Sethi IndAS 115 - Revenue from contracts with customers - sale or return: Indian Financial Reporting
India has decided to converge EARLY with IFRS 15 - Revenue from Contracts with Customers. Accordingly, MCA hasn't notified any IndAS 11 and IndAS 18 which are converged to IAS 18 on Revenue recognition.
Ind AS 115 (converged with IFRS 15) - Revenue from Contracts with Customers deals with reveue recognition.
Accounting Standard (AS) 9 - Revenue Recognition prescribes accounting for revenue.
The presentations deals specifically with the accounting for Revenue for sale of goods with right of return. It compares the accounting under IAS 18 with IFRS 15/ IndAS 115 with example and summarizes the net impact.
Sector impacted:
1. FMCD/FMCG companies,
2. B2B/ B2C Businesses
3. Ecommerce/ Distributor/retail & consumer companies
with 'No questions asked return/refund policies'
Indian Financial Reporting series:
Presentation by CA Varun Sethi at ICAI certificate course on IFRS/ IndAS - 2015
Covered IFRS 1/ IndAS 101, IAS/ IndAS 1, 7, 8, 10.
Contains
1. Comparison to ICDS, AS, IAS and references to Companies Act, 2013, SEBI regulations
2. Updates from IASB - Disclosure initiative on IAS 7
3. Practical questions, problems and solutions by regulators, FRRB, practices as evolved etc
Indian Financial Reporting series:
Presentation by CA Varun Sethi at ICAI certificate course on IFRS/ IndAS - 2015
Covered IFRS 1/ IndAS 101, IAS/ IndAS 1, 7, 8, 10.
Contains
1. Comparison to ICDS, AS, IAS and references to Companies Act, 2013, SEBI regulations
2. Updates from IASB - Disclosure initiative on IAS 7
3. Practical questions, problems and solutions by regulators, FRRB, practices as evolved etc
CA Varun Sethi IndAS 115 - Revenue from contracts with customers - sale or ...Varun Sethi
CA Varun Sethi IndAS 115 - Revenue from contracts with customers - sale or return: Indian Financial Reporting
India has decided to converge EARLY with IFRS 15 - Revenue from Contracts with Customers. Accordingly, MCA hasn't notified any IndAS 11 and IndAS 18 which are converged to IAS 18 on Revenue recognition.
Ind AS 115 (converged with IFRS 15) - Revenue from Contracts with Customers deals with reveue recognition.
Accounting Standard (AS) 9 - Revenue Recognition prescribes accounting for revenue.
The presentations deals specifically with the accounting for Revenue for sale of goods with right of return. It compares the accounting under IAS 18 with IFRS 15/ IndAS 115 with example and summarizes the net impact.
Sector impacted:
1. FMCD/FMCG companies,
2. B2B/ B2C Businesses
3. Ecommerce/ Distributor/retail & consumer companies
with 'No questions asked return/refund policies'
CA Varun Sethi Ind AS 20 - Accounting for Government GrantsVarun Sethi
Presentation by CA Varun Sethi: Indian Financial Reporting:
IndAS 20*: Accounting for Government Grants (GG) and disclosure for government assistance
Presentation includes comparison of Ind AS 20 issued by ICAI, (converged with IAS 20 issued by IASB), with AS 12, with IAS 20, and with ICDS (Income computation and accounting standards) on Government Grants
Sectors Impacted:
1. Corporates who enjoy Export related interest rate subvention on bank loans (Eg. Sugar/ Rice industries)
2. Non profit sector,
3. Companies enjoying government investment subsidies (Central investment subsidy scheme etc)
A silent (so far) revolution has been pioneered for Indian renewable companies (RC) which is no less than the fad and hype of the technology sector. RCs need to explore sustainable renewable energy finance with IPOs, innovative structures like Yield Cos (Utility and commercial scale plants) as also investment plans (for residential solar - My power loans)
The presentation essentially summarizes the renewables eco system in India, global solar experiences (US), IFRS/ US GAAP A/C issues for renewables sector, future of solar n grid parity, US IPO concepts n regulatory environment.
India Renewables-Eligible Overseas Capital Markets CandidateVarun Sethi
A silent (so far) revolution has been pioneered for Indian renewable companies (RC) which is no less than the fad and hype of the technology sector. RCs need to explore sustainable renewable energy finance with IPOs, innovative structures like Yield Cos (Utility and commercial scale plants) as also investment plans (for residential solar - My power loans)
The presentation essentially summarizes the renewables eco system in India, global solar experiences (US), IFRS/ US GAAP A/C issues for renewables sector, future of solar n grid parity, US IPO concepts n regulatory environment.
CA Varun Sethi IndAS 102 - Share based payments - Accounting for modificati...Varun Sethi
Presentation by CA Varun Sethi
The presentation summarizes through FlowBoxes the Accounting for Share based payments IndAS 102/ IFRS 2-
1. Accounting for modification or settlements of SBP and
2. SBP among group employees
CA Varun Sethi IndAS 21 - The effects of changes in foreign exchange ratesVarun Sethi
Presentation by CA Varun Sethi:
Explains through flowboxes - IndAS 21/ IAS 21 - The effects of changes in foreign exchange rates - especially
1. Accounting for Foreign Currency transactions and
2. Accounting for ‘Exchange differences’ on Foreign Currency transactions
3. Foreign currency translations for consolidation procedures (translation of account balances into reporting / presentation currency)
CA Varun Sethi Ind AS 21 - The effects of changes in foreign exchange ratesVarun Sethi
Presentation by CA Varun Sethi:
Explains through flowboxes - IndAS 21/ IAS 21 - The effects of changes in foreign exchange rates - especially
1. Accounting for Foreign Currency transactions and
2. Accounting for ‘Exchange differences’ on Foreign Currency transactions
3. Foreign currency translations for consolidation procedures (translation of account balances into reporting / presentation currency)
CA Varun Sethi - IndAS 102 - IFRS 2 - Share based payments - Accounting for M...Varun Sethi
Presentation by CA Varun Sethi :
Explains through flowboxes - IndAS 102 - IFRS 2 - Share based payments - especially
1. Accounting for modification or settlements of SBP and
2. SBP among group employees
CA Varun Sethi - IndAS 102 - IFRS 2 - Share based payments - Accounting for ...Varun Sethi
Explains through flowboxes - IndAS 102 - IFRS 2 - Share based payments - especially
1. Accounting for modification or settlements of SBP and
2. SBP among group employees
India - Renewables - eligible overseas capital markets candidate 2015Varun Sethi
India Renewables : Ready for a multi year, recurring, Capital Markets (IPO) activity.
There is fad and hype around a virtual world being created by technology companies including consumer internet, SaaS, IoT, Big Data, Social/Mobile commerce and billions have been invested into it and more lined up.
A silent (so far) revolution has been pioneered for Indian renewable companies (RC) which is no less than the fad and hype of the technology sector. RCs need to explore sustainable renewable energy finance with IPOs, innovative structures like Yield Cos (Utility and commercial scale plants) as also investment plans (for residential solar - My power loans)
The presentation essentially summarizes the renewables eco system in India, global solar experiences (US), IFRS/ US GAAP A/C issues for renewables sector, future of solar n grid parity, US IPO concepts n regulatory environment.
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challengesHolger Mueller
Holger Mueller of Constellation Research shares his key takeaways from SAP's Sapphire confernece, held in Orlando, June 3rd till 5th 2024, in the Orange Convention Center.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
buy old yahoo accounts buy yahoo accountsSusan Laney
As a business owner, I understand the importance of having a strong online presence and leveraging various digital platforms to reach and engage with your target audience. One often overlooked yet highly valuable asset in this regard is the humble Yahoo account. While many may perceive Yahoo as a relic of the past, the truth is that these accounts still hold immense potential for businesses of all sizes.
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
Recruiting in the Digital Age: A Social Media MasterclassLuanWise
In this masterclass, presented at the Global HR Summit on 5th June 2024, Luan Wise explored the essential features of social media platforms that support talent acquisition, including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok.
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
The Influence of Marketing Strategy and Market Competition on Business Perfor...
CA Varun Sethi IndAS 113 - Fair Value Measurements
1. IndAS 113
Fair Value Measurements
1 Presentation by : CA Varun Sethi Private
‘Basic Concepts’
2015
CA Varun
Sethi
09899766487
2. 20152
IndAS 113
Fair Value Measurements
CA Varun
Sethi
09899766487
Presentation by : CA Varun Sethi Private
Objective of fair value measurement :
• The OBJECTIVE of a fair value measurement in both cases is the same:
• To estimate the price at which an
• orderly transaction
• to sell the asset or to transfer the liability
• would take place between market participants
• at the measurement date
• under current market conditions (i.e. an exit price at the measurement date from
the perspective of a market participant that holds the asset or owes the liability).
3. 20153
IndAS 113
Fair Value Measurements: Coverage
CA Varun
Sethi
09899766487
Presentation by : CA Varun Sethi Private
Fair Value
Measurements
Disclosures about FV
measurements
Framework for applying
the definition of Fair
value
Definition of
Fair Value
Fair Value Hierarchy:
• To prioritize the inputs used
to measure FV, based on
the relative reliability of
those inputs.
• Valuation techniques
maximize use of observable
inputs and minimize the use
of unobservable inputs.
Assets Liabilities
Entity’s own
Equity instruments
Fair Value Framework:
• Characteristics of Asset or
liability to be Fair valued
• Unit of account
• Market participants
• The transaction
• Exit price
• Principal market
4. 20154
IndAS 113
Fair Value Measurements
CA Varun
Sethi
09899766487
Presentation by : CA Varun Sethi Private
Fair Value
Measurements
(Key Concepts)
1. Exit price
2. Principal market
1. Valuation premise
2. Fair value hierarchy
1. Highest and Best use.
1. Unit of account
2. Market participant
assumptions
This Ind AS applies when another Ind AS requires or permits:
1. Initial or subsequent fair value measurements or
2. Disclosures about fair value measurements
5. 20155
IndAS 113
Fair Value Measurements
CA Varun
Sethi
09899766487
Presentation by : CA Varun Sethi Private
Fair Value
Measurements
Application to
Financial instruments
Application to
liabilities & an entity’s
own equity
instruments
Application to
Non-financial assets
(NFA)
Initial Measurement
Subsequent
Measurement
6. 20156
IndAS 113
Overview of Scope of Fair Value Measurements
CA Varun
Sethi
09899766487
Presentation by : CA Varun Sethi Private
APPLIES
TO
EXCEPT
FOR
DOES
NOT
APPLY
TO
This guidance applies to ALL fair value measurements of
1. Assets and liabilities (both financial and nonfinancial) and
2. Financial instruments (FV) in shareholder’s equity
in IndAS.
1
• Measurement of share-based payments (IndAS 102) and
• Leasing transactions within the scope of Ind AS 17, Leases;
• Measurements that have some similarities to fair value but are not
fair value, such as net realizable value in Ind AS 2, Inventories, or
value in use in Ind AS 36, Impairment of Assets.
2
3
DOES NOT APPLY to Topics that require (or permit) measurements
that are similar to, but are not intended to represent, FV.
7. 20157
IndAS 113
Definition of ‘Fair Value’
CA Varun
Sethi
09899766487
Presentation by : CA Varun Sethi Private
FV is
Exit price
FV is NOT
Transaction
price
FV in
Principal market
Fair value is the price to sell an asset or transfer a liability, and
therefore represents an exit price, not an entry price.
1
The transaction price is NOT presumed to represent the fair value of
an asset or liability on its initial recognition
2
3
Fair value is an exit price in the principal market (or in the absence
of a principal market, the most advantageous market) in which the
reporting entity would transact
FV is Market-
based
measurement
4
Fair value is a market-based measurement, not an entity-specific
measurement
FV excludes
Transaction
costs.
5
Fair value measurements should NOT BE adjusted for transaction
costs.
8. 20158
IndAS 113
Fair Value Framework
CA Varun
Sethi
09899766487
Presentation by : CA Varun Sethi Private
A fair value measurement requires a reporting entity to determine
all of the following:
Unit of
account
Highest and
best use
Principal
market
The particular asset or liability (both financial and nonfinancial) that is the
subject of the measurement and drives the level of aggregation (or
disaggregation) for presentation and disclosure purposes.
1
For a nonfinancial asset, the valuation premise that is appropriate for the
measurement.2
3 The principal (or most advantageous) market for the asset or liability.
Inputs and
Market
participants
4
The valuation technique(s) appropriate for the measurement, considering
1. the availability of data with which to develop inputs that represent the
assumptions that market participants would use when pricing the asset
or liability and
2. the level of the fair value hierarchy within which the inputs are
categorized.
9. 20159
IndAS 113 (Para 11 to 14)
Fair Value Framework: Asset or Liability
CA Varun
Sethi
09899766487
Presentation by : CA Varun Sethi Private
‘Characteristics’ of the asset or liability
Condition or location
that market participants would require
Restrictions on sale or use of assets:
Whether Asset specific or Entity specific?
This may require the market price to
be adjusted for
1. transformation costs and (or)
2. transportation costs,
3. as well as a normal profit margin.
Determining whether a restriction is a
1. characteristic of the asset or
2. characteristic of the entity holding
the asset
may be determined (judgement) and
may be contractual in some cases.
Fair value measurement should take into account characteristics
SPECIFIC TO the asset or liability that market participants would
consider when pricing the asset or liability at the measurement date :
10. 201510
IndAS 113 (Para 15 to 21)
Fair Value Framework: The Transaction
CA Varun
Sethi
09899766487
Presentation by : CA Varun Sethi Private
In the absence of evidence to the contrary, the market in which the
entity would normally enter into a transaction to sell the asset or to
transfer the liability is PRESUMED to be the principal/adv. Market.
Transaction taking place
The most advantageous market concept
is applied only in situations where the
reporting entity determines there is NO
principal market for the asset or liability
being measured.
In the principal market
for the asset or liability
Most advantageous market for the
asset or liability
1. Market with the greatest volume and
level of activity for the asset or liability
that the reporting entity can access.
2. The principal (or most advantageous)
market (and thus, market participants)
shall be considered from the
perspective of the reporting entity.
11. 201511 Presentation by : CA Varun Sethi Private
A fair value measurement assumes that the transaction
‘Transaction’ taking place
A fair value measurement considers
market conditions as they exist at the
measurement date and is intended to
represent the current value of the
asset or liability, not the potential
value of the asset or liability at some
future date.
Orderly transaction
Occur on the
‘measurement date’
The hypothetical TRANSACTION
assumes that market participants
have sufficient knowledge and
awareness of the asset or liability,
obtained through customary due
diligence even if, in actuality, this
process may not have yet begun (or
may never occur at all if the entity
does not sell the asset).
IndAS 113 (Para 15 to 21)
Fair Value Framework: The Transaction
CA Varun
Sethi
09899766487
12. 201512 Presentation by : CA Varun Sethi Private
Transaction costs : Transaction costs represent costs that result directly from and are
essential to a transaction. That is, they would not have been incurred by the entity had
the transaction not occurred. These costs are NOT included in fair value measurement
because they are not characteristics of the asset or liability being measured.
IndAS 113 (Para 22 to 26)
Fair Value Framework: Market Participants
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1. Standard specifies that fair value is a
1. MARKET-BASED MEASUREMENT,
2. NOT AN entity-specific value.
2. Fair value DOES NOT represent the value to one particular market participant,
whose assessment of risk, specific synergies, or intended use for an asset may
differ from other market participants.
1. Instead, companies may consider those characteristics that are specific to the types
of entities that would generally transact for the asset or liability being measured
acting in their “economic best interest”.
2. STANDARD DOES NOT require companies to identify ACTUAL market participants
when measuring FV.
13. 201513
IndAS 113 (Para 27 to 30)
Application to Nonfinancial Assets : highest & best use
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1. The highest and best use of a NONFINANCIAL ASSET takes into account
the use of the asset that is
1. physically possible, for example, the location or size of a property,
2. legally permissible, for example, the zoning regulations applicable to a
property &
3. financially feasible.
MP to generate economic benefits
USING the asset in its
highest & best use
SELLING to another MP for use in
its highest and best use.
1.Highest & best use is determined from the perspective of MPs
2.A reporting entity’s current use of a nonfinancial asset is presumed to be its
highest & best use unless market or other factors suggest that a different
use by market participants would maximize the value of the asset.
14. 201514 Presentation by : CA Varun Sethi Private
VALUATION PREMISE
1. FV of the asset would be measured from perspective of market participants
who are presumed to hold the complementary assets and liabilities.
2. Further, the same valuation premise should be used for EACH asset,
regardless of whether any individual asset within the group would have a
higher value under another premise.
3. The fair value measurement of a non-financial asset assumes that the asset is
sold consistently with the unit of account specified in OTHER Ind ASs (which
may be an individual asset).
In combination with other
assets &/(or) liabilities
Standalone basis
ValuationpremiseforNFA IndAS 113 (Para 31 to 33)
Application to Nonfinancial Assets (NFA) : highest & best use
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15. 201515
IndAS 113 (Para 34 – 46)
Application to liabilities and an entity's own equity instruments
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Presentation by : CA Varun Sethi Private
Considerations:
FV of Liability (L) or own equity instrument (EI)
ADJUST quoted price of L or entity's own EI
held by another party as asset ONLY for factors
specific to the asset, NOT applicable to FV of L
or EI. ‘No adjustment for restriction’ on the
transfer of a L or EI.
*Consider Nonperformance risk
- entity’s own credit risk
- inseparable (but not
separable) 3rd party credit
enhancement
Liability TRANSFERED to
a MP at the measurement
date
Use of a
1. Corresponding identical asset
2. If NO corresponding assets – use
Valuation technique
A fair value measurement assumes that a liability (financial or
non-financial) or an entity's own equity instrument (e.g. equity
interests issued as consideration in a business combination) is
TRANSFERRED to a market participant at the measurement date.
*Not applicable for EI
16. 201516 Presentation by : CA Varun Sethi Private
1. The fair value of a LIABILITY reflects the effect of non-performance risk.
2. A reporting entity takes into account the effect of its credit risk (credit standing) on
the fair value of the liability in all periods in which the liability is measured at fair
value because those that hold the reporting entity’s obligations as assets would
take into account the effect of the reporting entity’s credit standing when estimating
the prices they would be willing to pay.
IndAS 113 (Para 34 – 46)
Application to liabilities and an entity's own equity instruments
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FV of a liability or entity's own equity instrument : Use of a corresponding asset to
measure a liability
1. Using the quoted price in an active market for the identical item held by another
party as AN ASSET.
2. If that price is NOT available, using other observable inputs, such as quoted price in
a market that is not active for the identical item held by another party as an asset.
3. If the observable prices in (a) and (b) are NOT available, using another valuation
technique, such as: 1. An income approach 2. A market approach
17. 201517 Presentation by : CA Varun Sethi Private
IndAS 113 (Para 57 to 60)
Fair value at initial recognition
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Transaction price
(Entry price)
Fair Value
(Exit Price)
At Initial recognition:
No gain or loss
CaseA
Transaction price
(Entry price)
Fair Value
(Exit Price)
At Initial recognition:
Recognize gain or loss
CaseB
Transaction price
(Entry price)
the price paid to acquire the asset or received to
assume the liability (an entry price).
Fair Value
(Exit Price)
price that would be received to SELL the asset or paid
to transfer the liability (an exit price).
18. 201518 Presentation by : CA Varun Sethi Private
IndAS 113 (Para 61 to 66)
Use of valuation techniques
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Cost approach Income approach
Valuation techniques
Market approach
An entity shall use valuation techniques that are
• appropriate in the circumstances and
• for which sufficient data are available to measure fair value,
• maximizing the use of relevant observable inputs and
• minimizing the use of unobservable inputs.
Revisions resulting from a change in the valuation technique or its
application shall be accounted for as a change in accounting
estimate in accordance with Ind AS 8.
19. 201519 Presentation by : CA Varun Sethi Private
IndAS 113 (Para 67 to 71)
Inputs to valuation techniques
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1. A reporting entity shall select inputs
1. that are consistent with the characteristics of the asset or liability &
2. that market participants would take into account in a transaction for asset or
liability
2. In some cases, those characteristics result in the application of an adjustment,
such as a premium or discount (e.g., control premiums or discounts for lack of
marketability).
Premiums or discounts:
1. Premiums or discounts that reflect size as a characteristic of the reporting entity’s
holding rather than as a characteristic of the asset or liability (for example, a control
premium when measuring the fair value of a controlling interest) are NOT permitted
in a fair value measurement.
2. Any adjustment for the former is NOT permitted, the latter should be considered if it
is consistent with how market participants would price the asset or liability
20. 201520 Presentation by : CA Varun Sethi Private
IndAS 113 (Para 67 to 71)
Inputs to valuation techniques
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The price within the bid-ask spread that is most representative of
FV in the circumstances shall be used to measure FV.
Option I
1. Input = Bid Price for ASSET positions
2. Input = Ask price for LIABILITY positions
Option II
Input = Mid Market (Average of bid and ask prices)Option III
Pricing Inputs - within the bid-ask spread
21. 201521 Presentation by : CA Varun Sethi Private
IndAS 113 (Para 67 to 71)
Inputs to valuation techniques
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Use of unobservable inputs
1. The use of unobservable inputs is NOT intended to allow for the inclusion of entity-
specific assumptions in a fair value measurement. While STANDARD acknowledges
that unobservable inputs may sometimes be developed using a company’s own data,
the guidance is clear that these inputs should reflect MP assumptions.
2. Adjust factors such as
1. Timing differences between the transaction date and the measurement date, or
2. Differences between the asset being measured and a similar asset that was the
subject of the transaction.
Risk Adjustments:
1. Regardless of the valuation technique used, a reporting entity shall include appropriate
risk adjustments, including a risk premium reflecting the amount that market participants
would demand as compensation for the uncertainty inherent in the cash flows of an
asset or a liability.
22. 201522
IndAS 113 (Para 72 to 75)
Fair Value Hierarchy
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Presentation by : CA Varun Sethi Private
Level 1
Level 2
Level 3
Quoted prices (unadjusted) in active markets for IDENTICAL assets &
liabilities that reporting entity can access at the measurement date.1
Inputs other than quoted prices in active markets for identical assets
and liabilities that are observable either directly or indirectly.2
3 Unobservable inputs for the asset or liability.
Standard establishes a fair value hierarchy that prioritizes the inputs used in valuation
techniques into the following three levels:
Eg. Assume in the FV measurement of an OTC option on traded equity using option pricing
model that the risk-free rate & the dividend yield were determined to be Level 2 inputs, but
the expected volatility was determined to be a Level 3 input (as might be the case with a
long-dated option). If expected volatility is significant to the overall fair value of the option
(which would be typical), the entire measurement would be categorized in Level 3.
23. 201523 Presentation by : CA Varun Sethi Private
IndAS 113 (Para 76 to 80)
Fair Value Hierarchy: Level 1
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Quoted price in an
active market does
not represent fair
value at the
measurement date
If an adjustment to
the corresponding
asset’s price is
required to address
differences btw the
asset & the liability
or equity instrument
(adjusted price would
NOT be a Level 1
measurement)
Level 1 measurement
exceptions
Holds a large
number of SIMILAR
assets and liabilities
for which quoted
prices exist, but are
not easily accessible,
An entity shall NOT make an adjustment to a Level 1 input
EXCEPT in the following circumstances:
24. 201524 Presentation by : CA Varun Sethi Private
IndAS 113 (Para 81 to 85)
Fair Value Hierarchy: Level 2
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Level 2
Inputs other than quoted prices in active markets for identical assets
and liabilities that are observable either directly or indirectly.2
Example: Level 2 inputs include the following
1. Quoted prices for similar assets or liabilities in ACTIVE markets.
2. Quoted prices for identical or similar assets or liabilities in markets that are NOT active.
3. Interest rates and yield curves observable at commonly quoted intervals.
4. Market-corroborated inputs.
Level 2 inputs : Adjustments : Adjustments to Level 2 inputs will vary depending on factors
specific to the asset or liability:
1. The condition or location of the asset.
2. The volume or level of activity in the markets within which the inputs are observed .
3. The extent to which inputs relate to items that are comparable to the asset or liability.
E.g.: Adj. might be required for timing differences between the transaction date and the
measurement date
25. 201525 Presentation by : CA Varun Sethi Private
IndAS 113 (Para 86 to 90)
Fair Value Hierarchy: Level 3
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Level 3 Unobservable inputs for the asset or liability.3
Level 3 inputs
1. Unobservable inputs shall be used to measure fair value to the extent that relevant
observable inputs are not available, which might include the reporting entity’s own data
2. Unobservable inputs shall reflect the assumptions that market participants would use
when pricing the asset or liability, including assumptions about risk
Requirements of other IndAS for FV: Level 3 inputs :
1. A number of Topics require (or permit) the use of fair value measurements, irrespective of
the level of market activity for the asset or liability as of the measurement date.
E.g. the re-measurement of derivative instruments under ASC 815 and the initial
measurement of intangible assets under ASC 805). As such, STANDARD allows for the
use of unobservable inputs to measure fair value in situations where observable inputs
are not available.
26. 201526 Presentation by : CA Varun Sethi Private
IndAS 113 (Para 86 to 90)
Fair Value Hierarchy: Level 3
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Level 3 Unobservable inputs for the asset or liability.3
Level 3 inputs
Incorporate Assumptions about risk
• A measurement that does not include an adjustment for risk would not represent a fair value
measurement if market participants would include one when pricing the asset or liability.
Develop MP based unobservable inputs
• An entity shall develop unobservable inputs using the best information available in the
circumstances, which might include the entity's own data. In developing unobservable inputs,
an entity may begin with its own data, but it shall adjust those data if reasonably available
information indicates that other market participants would use different data or there is
something particular to the entity that is not available to other market participants (e.g. an
entity-specific synergy).