IFRS 13

Which of the following would NOT be considered a Level 2 input under IFRS 13?

• Quoted prices for a similar asset in an active market

• A transaction price from an illiquid market adjusted for liquidity risk

• An internally developed cash flow model incorporating company-specific assumptions

• Interest rate yield curves derived from observable market data

When measuring the fair value of a liability under IFRS 13, which statement is FALSE?

• The fair value should reflect the price a market participant would require to assume the liability

• Own credit risk must be incorporated into the liability’s valuation

• The fair value should be based on the highest price quoted in the market, regardless of transferability

• If no observable market exists, an entity must use a valuation technique consistent with IFRS 13 principles

A company is measuring fair value for a specialized asset under IFRS 13 but finds that different market participants would use different valuation techniques. What should the company do?

• Apply a weighted average of all market participant valuations

• Use the valuation technique most commonly used in the relevant industry

• Choose the valuation technique that results in the highest fair value

• Default to historical cost if no single valuation approach is dominant

Which statement about the concept of "Highest and Best Use" in IFRS 13 is INCORRECT?

• The highest and best use of an asset must be physically possible, legally permissible, and financially feasible

• An entity’s current use of an asset always represents its highest and best use

• Market participant assumptions determine an asset’s highest and best use, not the reporting entity’s intended use

• Restrictions on an asset’s use that would transfer with the asset should be factored into its fair value

If no market price is available for an asset, IFRS 13 requires the use of valuation techniques based on observable and unobservable inputs. Which of the following is NOT a key principle in selecting an appropriate valuation technique?

• Maximizing the use of relevant observable inputs

• Using multiple valuation techniques and averaging the results

• Ensuring the valuation technique reflects the assumptions of market participants

• Being consistent with valuation approaches used in the market for similar assets