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First i would like to apologize for Commenting in the ASK THE TUTOR forum.I did not know that students are not allowed to comment in such forums,
My question:
Does the Various IFRS specify for which type of assets fair value measurement is required ? If Yes , Could you give me an example of a asset or liability that is required to be Valued under fair value measurement .Of the Three Approaches to Fair value measurement Which is predominantly used by Businesses (practically speaking)?
Computing Fair Value Based on Cost and income approach is easier than using market approach, but it does not reflect the most appropriate market conditions as market research is absent in such methods.But the Market approach is more complicated and also requires additional expenditure to Collect such data.So which do businesses prefer?
Thank You,
Hi Annamalai
No problem and no harm done … but that’s specifically why there are 2 forums for each paper – one is for general use and the other is for the tutor
Given that current assets and liabilities are always measured at the lower of cost and net realisable value, the concept of fair value measurement is not applicable
So that leaves us with the non-current assets.
You asked for examples … buildings, patents, licences, land, plant … how many more do you want?
As for supplementary questions 2 and 3 … I have no experience at all of fair value measurement in practice so I can neither answer “practically speaking” nor “So which do businesses prefer?”
I would be prepared to hazard a guess, for what it’s worth
If it’s easier, therefore quicker, therefore cheaper I imagine most businesses will opt for the easy way out and then prepare for a fight with the auditors
And I doubt very much that such a fight will be a frequent occurrence
But that’s only a guess
OK?
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