There is no contribution comparable to IAS

Accounting according to IFRS / 4.3.3 Fair value

Prof. Dr. Stefan Müller, Laura Peters

Margin no. 58

The concept of fair value is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly business transaction between market participants on the assessment date.[1] In terms of content, there are hardly any differences to the definition of the old IAS 16.6, IAS 18.7, IAS 21.8, IAS 32.11, which applied until the 2014 financial year, according to which the fair value is the amount at which an exchange between knowledgeable, willing and independent business partners could be made. It is an exit price, regardless of whether it can be observed directly or whether it is estimated using recognized valuation techniques. Transaction costs need not be taken into account, as these are not a characteristic of an asset or a liability (IFRS 13.25). The situation is different with transport costs, since these can very well be part of the asset (IFRS 13.26 / BC62).

Margin no. 58a

The fact that direct recourse to the construct of an active market and the conditions attached to it in the case of production-related and mostly company-specific assets, such as property, plant and equipment and buildings, will in many cases not actually be possible in view of the diverse specifications and the resulting inhomogeneity, is implemented by IFRS 13 the permitted recourse to corresponding market price estimates. Specifically, the following fair value hierarchy is provided for evaluation factors:

  • If there is an observable market price in an active market accessible to the company, this is to be recognized as fair value on the valuation date (mark to market).
  • If there are no corresponding market prices on the reporting date, but real-time market or transaction prices can be observed for comparable assets, the latter - adjusted if necessary - must be used.
  • If this is not possible either, the fair value is to be determined using an assessment process (technique). A comparison with current transaction prices for similar assets or a discounted cash flow (DCF) model (mark to model) or, alternatively, a cost-oriented method (IFRS 13.B5 ff.) Is possible.

According to IFRS 13.82, market prices can be adjusted on the basis of

  • Price quotations for similar valuation objects in active markets,
  • Price quotes for identical valuation objects on markets that are not active,
  • input factors other than market prices that can be observed for the valuation object, such as interest rates, volatilities or credit spreads, market-based input factors.

The valuation methods can be summarized in 3 groups (IFRS 13.62):

  • Market price-oriented methods derive the fair value from market or transaction prices of comparable assets (IFRS 13.B6).
  • Capital value-oriented methods such as the DCF method determine the fair value as a future value by discounting future cash surpluses from the use of the valuation object (IFRS 13.B10).
  • Cost-oriented methods represent the fair value via the replacement costs, taking into account the properties of the object being valued (IFRS 13.B8).

Margin no. 58b

For the specific characteristics, see "Time value".

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