Fair Value Accounting Under IFRS & Asset Impairments: The Recession of 2008-2009

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Fair Value Accounting Under IFRS & Asset Impairments: The Recession of 2008-2009

Category: Coursework

Subcategory: Accounting

Level: University

Pages: 1

Words: 550

Fair Value Accounting
Student’s Name
Institution
Fair Value Accounting
Question 1
IFRS 13 is a valuation method that assigns a price to an asset, liability or equity to what would otherwise be obtained or paid to execute the same transaction in an arm strength business transaction. In this regard, IFRS 13 takes precedence over other IFRS fair value measurement standards given that it is one of the most current and updated standards (Ahmed, Chalmers & Khlif, 2013). However, the potential interaction of IFRS with other standards is the fact that they aim at similar objectives of ensuring that the price for the settlement of a transaction is arrived at reliably under the prevailing market situations.
There are increased disclosure requirements under IFRS 13 to reflect more accurate and verifiable accounting of business transactions. For example, the standards provide that transactions should be divided into phases based on their level of activity in the market. Level one inputs are required for the prices of transactions in very active markets while the level three for the least active markets (Ahmed, Chalmers & Khlif, 2013). In the active markets, the prices can be established reliably, unlike the least active markets. Through such division, IFRS ensures that more time is devoted to the determination of prices in less active markets thus guaranteeing appropriate pricing.
Question 2
The main problems that an entity may encounter with IFRS include the determi…

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