Unit of account

The concept of “unit of account” comes from IFRS 13 where it is defined as “the level at which an asset or a liability is aggregated or disaggregated in an IFRS for recognition purposes”. It is a principle of IFRS 13’s fair value measurement approach that measurement of a particular asset or liability should be consistent with its unit of account (another principle is that it should be consistent with its highest and best use). The “typical” example considered is where you are looking to measure a large number of the same quoted share – should this be measured as the no. of shares x an amount per share (i.e. disaggregated) or in total? IFRS 13 says that even though to sell them all together might result in a premium or discount, the individual share is the unit of account (i.e. disaggregate) and each is measured at the quoted share price. If, however, the shareholding amounted to a controlling interest, what you are trying to measure (the unit of account) is the aggregated shareholding for which the premium (usually) over the quoted price would be considered in measuring fair value.