Please enable JavaScript.
Coggle requires JavaScript to display documents.
iica17-18/022022-BasisofValue - Coggle Diagram
iica17-18/022022-BasisofValue
FMV
cash equivalents
conversion of offerings in kind
include transfer of asset
represents price
different from value in general
hypothical buyer/seller
not the specific one
arms lenght pricing
buyer & seller working in own economic interest
use of comparable transaction within related party?
open & unrestricted market
no compulsion to buy or sale
all party to have reasonable knowledge of facts
practical aspect
valuer has to under basic diligence
Arms length pricing
identified buyer & seller
unilateral price cannot be FMV
buyer price < FMV < Seller price
hypothetical market should have some notion of reality
FV for accounting purposes
1 quoted price
2 probable price
Estimated price
Market value (IVS)
estimated amount
should exchange
on valuation date
after proper marketing
before valuation date
asset exposure to market
parties acting knowledgeably & prudently
no specific knowledge
causious but not overstatement or understatement
prudence
act based on best available information
investment value
the value of an asset to a particular owner or prospective owner for individual investment or operational objectives.
factors of diff with FMC
Cash flows
Risk
Product synergy & cannibalization
Other strategic advantages
Tax
intrinsic value
The value that an investor considers
to be the ‘true’ or ‘real’ value
that will become the market value when other investor reach the same conclusion
on the basis of an evaluation or available facts,
Fair Value
standard of value defined by law/institution/authority/statute
depends on purpose & context
imposed by third party
for accounting purpose IND AS 113
The price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants
at measurement date
it is objective and rule based
IFRS 13 - key concepts
Exit price
Entry price
irrelevant for accounting purpose
Unit of account (UOA)
how accounting is done
Highest and best use (HABU)
non-financial asset
Principal market (PM)
Most advantageous market (MAM)
Active market (AM)
Orderly transaction
PM>MAM>AM
Market participants (MPs)
Market participant’s assumption (MPA)
Fair value hierarchy (FVH)
Objective Info based - unadjusted quoted price (compliance purpose)
management basis (level 3)
Income approach or market or asset approach (transaction purpose)