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IFRS 13, Fair Value Measurement - Coggle Diagram

- - - - An example of this is where an entity sells a large block of shares, and it has to sell them at a discount price to the market price.
      - This is a characteristic of holding the asset rather than a characteristic of the asset itself and should not be taken into account when fair valuing the asset.
- - - - because these costs are characteristics of the transaction and not the asset or liability
      - However, if location is a factor, then the market price is adjusted for the costs incurred to transport the asset to that market.
      - Market participants must be independent of each other and knowledgeable, and able and willing to enter into transactions.
- - - - based on the type of inputs to the valuation techniques used
      - Each fair value measurement is categorised based on the lowest level input that is significant to it
  - - - an entity uses that price without adjustment when measuring fair value
      - An example of this would be prices quoted on a stock exchange
    - - Active markets are ones where transactions take place with sufficient frequency and volume for pricing information to be provided
    - - where the price quoted in an active market does not represent fair value at the measurement date
        
        An example of this may be where a significant event takes place after the close of the market such as a business reorganisation or combination.
  - - - interest rates
      - credit spreads
      - yields curves
    - - and, if this adjustment is significant
        
        then it may require the fair value to be classified as level 3.
  - - - therefore these inputs must be developed to reflect the assumptions that market participants would use when determining an appropriate price for the asset or liability
    - - cash flow forecasts may be used to value an entity that is not listed
- - - - physically possible
      - legally permissible
      - financially feasible
  - - - the physical characteristics of the asset
      - any legal restrictions on its use
      - whether the value generated provides an adequate investment return for market participants