- July 28, 2021 at 5:49 am #629620Noah098Member
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” In many cases there is no observable market to provide pricing information and the highest and best use is not applicable.
In this case, the fair value is based on the perspective of a market participant who holds the identical instrument as an asset.
If there is no corresponding asset, then a corresponding valuation technique may be used.
This would be the case with a decommissioning activity. The fair value of a liability reflects the non performance risk based on the entity’s own credit standing plus any compensation for risk and profit margin that a market participant might require to undertake the activity. Transaction price is not always the best indicator of fair value at recognition because entry and exit prices are conceptually different.”
sir i got this from technical article on IFRS 13 the immediate paragraph above disclosure requirements. i don’t understand the part relating decommissioning activity and non-performance risk! seems too difficultJuly 28, 2021 at 5:31 pm #629691Stephen WidbergKeymaster
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Build asset with obligation to dismantle.
IFRS 13 is giving guidance on how to calculate the provision.
If risk is to be factored in you would be given a %.
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