AASB 13 - Fair Value Measurement - September 2011
The fair value measurement approachThe fair value measurement approach
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The fair value measurement approach
B2 The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. A fair value measurement requires an entity to determine all the following:
(a) the particular asset or liability that is the subject of the measurement (consistently with its unit of account).
(b) for a non-financial asset, the valuation premise that is appropriate for the measurement (consistently with its highest and best use).
(c) the principal (or most advantageous) market for the asset or liability.
(d) the valuation technique(s) appropriate for the measurement, considering the availability of data with which to develop inputs that represent the assumptions that market participants would use when pricing the asset or liability and the level of the fair value hierarchy within which the inputs are categorised.