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IFRS 13 (Mehran PYQ)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IFRS 13 (Mehran PYQ)

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by Stephen Widberg.
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  • July 25, 2021 at 5:44 pm #629400
    sarah762
    Member
    • Topics: 67
    • Replies: 127
    • ☆☆

    M/J 2016

    Dear tutor

    1. Why did the question ask us to apply IFRS 13 in measuring the FV of the inventory? I thought we do not apply IFRS 13 for inventory?

    2. The answer uses the concept of principal and most advantageous market but not the highest and best use. I don’t understand the reason for doing so. I thought we should use the highest and best use because it is a non financial asset?

    Hope you can explain. Thank you in advance.

    July 25, 2021 at 5:46 pm #629402
    sarah762
    Member
    • Topics: 67
    • Replies: 127
    • ☆☆

    Can you explain to me please? I am having trouble in applying the concept

    July 26, 2021 at 7:46 am #629434
    Stephen Widberg
    Keymaster
    • Topics: 12
    • Replies: 2843
    • ☆☆☆☆☆

    IFRS 13 applies whenever FV is being considered. So it would be relevant in determining the realisable value of inventory.

    Guidance in IFRS 13 says that for items sold in a ‘market’ – i.e. inventory, use:
    1. Principal market, and if there is no principal market, use:
    2. Market that would give most advantageous price.

    Deloitte has a good summary if you need more:

    https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/audit/ca-en-audit-clearly-ifrs-fair-value-measurement-ifrs-13.pdf#:~:text=Market%20%E2%80%93%20Fair%20value%20measurement%20under%20IFRS%C2%A013%20assumes,level%20of%20activity%20for%20the%20asset%20or%20liability.

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