Bid and offer prices
The difference is the bid–offer spread. IFRS 13 provides guidance on using a price within the bid–ask spread that is most representative of fair value in the circumstances and permits mid-market pricing or other practical conventions in relevant cases. A spread is not automatically equal to the complete transaction cost. Identify whether the price refers to buying or selling from the relevant market participant’s perspective.
Worked example
A security is quoted at a bid of $9.90 and an offer of $10.10. The quoted spread is $0.20 per unit; an entity measures fair value using the applicable IFRS 13 guidance and facts.
Common mistake
Reversing bid and offer, or assuming a quoted spread is always the only cost of a transaction.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Supporting | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |