Financial Reporting · Ind AS 113 Fair Value Measurement

Ind AS 113 Disclosures and Differences from IFRS 13

Updated 5 October 2026 · Fact-checked

Ind AS 113 requires disclosures that show how each fair value was measured: the amount, hierarchy level, valuation technique and inputs. Recurring measurements need more, such as Level 3 reconciliations and sensitivity. Non-recurring ones need the reason for measurement. Apply it prospectively, and check Ind AS wording against IFRS 13.

Understand Ind AS 113 Disclosures and Differences from IFRS 13

A fair value number alone tells a reader little. Ind AS 113 asks you to disclose how reliable the number is. The disclosures help users judge the valuation techniques and inputs used, and, for recurring Level 3 measurements, the effect on profit or loss and other comprehensive income.

The first split is recurring versus non-recurring. A recurring fair value measurement is one that Ind AS requires or permits in the balance sheet at the end of every reporting period, for example investments measured at FVTPL or FVOCI. A non-recurring measurement happens only in particular circumstances, for example assets acquired and liabilities assumed in a business combination, which are measured at fair value on the acquisition date.

Measurements that are similar to fair value but are not fair value, such as net realisable value or value in use, are outside Ind AS 113. Measurements based on fair value less costs to sell or costs of disposal, such as an asset held for sale under Ind AS 105 or an impairment test under Ind AS 36, are also outside the Ind AS 113 disclosure requirements. Do not use them as examples of non-recurring fair value measurements.

The second split is by class of asset or liability. You decide classes based on the nature, characteristics and risks of the item and its hierarchy level. You may need more classes for Level 3 items because of their higher uncertainty. Give the disclosures class by class, usually in a table.

The third group is items not measured at fair value in the balance sheet but whose fair value is disclosed, for example investment property under the cost model, or borrowings at amortised cost. For these you give a lighter set: the hierarchy level, the technique and inputs for Level 2 and Level 3, and a note if the highest and best use of a non-financial asset differs from its current use. The quantitative information about significant unobservable inputs applies to fair value measurements in the balance sheet, not to these disclosure-only items.

On transition, Ind AS 113 is applied prospectively from the start of the annual period in which it is first applied. Its disclosure requirements need not be applied to comparative information provided for periods before initial application. A first-time adopter of Ind AS follows Ind AS 101 (with Ind AS 1) for the comparative information it presents. IFRS 13 applies to annual periods beginning on or after 1 January 2013. For Ind AS, the date follows the Companies (Indian Accounting Standards) Rules, 2015 and the entity's own Ind AS applicability. Ind AS 113 is closely aligned with IFRS 13, so most differences are wording and cross-references to Ind AS. Learn any specific carve-outs from the ICAI study material rather than guessing.

Key rules to remember

Disclosure for every class (recurring and non-recurring): Fair value at the end of the period + hierarchy level + (Level 2 and 3) technique and inputs + any change in technique with reasons; For non-recurring items also state the reason for the measurement. For Level 3 measurements in the balance sheet, give quantitative information about significant unobservable inputs.
Additional disclosures for recurring Level 3: Opening balance + gains/losses in P&L + gains/losses in OCI + purchases − sales + issues − settlements + transfers into Level 3 − transfers out of Level 3 = Closing balance; Show transfers into Level 3 and transfers out of Level 3 as separate lines, with the reasons. Also disclose the line items where gains and losses are shown, the unrealised portion for items held at the reporting date, the valuation process, and a narrative sensitivity of fair value to unobservable inputs.
Additional disclosures for recurring Level 1 and 2: Transfers between Level 1 and Level 2: amounts, reasons, and the policy for deciding when a transfer occurred; The policy must be applied consistently to transfers in and transfers out.
Fair value disclosed but not measured at fair value: Disclose the level, and for Level 2 and 3 the technique and inputs; for non-financial assets, state if the highest and best use differs from current use; Examples are investment property under the cost model and borrowings at amortised cost. Quantitative information on unobservable inputs is not required for these disclosure-only items.
Transition rule: Prospective application from the start of the annual period of initial application; the disclosure requirements need not be applied to comparative information for periods before initial application; Do not restate earlier fair values. First-time adopters follow Ind AS 101 and Ind AS 1 for the comparatives they present.

How to solve Ind AS 113 Disclosures and Differences from IFRS 13 questions

Use this order for any question on Ind AS 113 disclosures, transition or IFRS 13 differences.

1Read the case and list each asset or liability with its basis of measurement (fair value in the balance sheet, or only disclosed).
2Mark each item as recurring or non-recurring. If it is not measured at fair value in the balance sheet, treat it as disclosure-only.
3Decide the hierarchy level from the inputs. Level 1 is quoted prices, Level 2 is other observable inputs, and Level 3 is unobservable inputs.
4Group items into classes by nature, characteristics, risks and level.
5Apply the matching disclosure list: the basic list for all, the extra list for recurring Level 1 and 2 transfers and for Level 3, and the lighter list for disclosure-only items.
6For a reconciliation, build the opening-to-closing table and check that it ties to the closing balance.
7For transition or difference questions, state prospective application and that the disclosure requirements need not be applied to comparatives for periods before initial application, note that first-time adopters follow Ind AS 101, then state the Ind AS point in plain words and close with a one-line conclusion.

Quickest way: Three-question disclosure check

When to use it: Use this when you have little time and the question asks what must be disclosed.

Is it recurring or non-recurring? Non-recurring adds the reason for the measurement.
Which level is it? Level 3 recurring adds the reconciliation, the P&L and OCI effects, the valuation process and sensitivity.
Is it measured at fair value in the balance sheet at all? If not, give only the level, and the technique and inputs for Level 2 and 3.
Write the answer as a short list, then add one line on prospective transition.

Common mistakes in Ind AS 113 Disclosures and Differences from IFRS 13

Treating all fair value measurements as recurring.
Students link fair value only to investments carried at FVTPL.
Fix: Test whether the measurement is required at every reporting date. Fair values used on a business combination are non-recurring. Fair value less costs to sell or dispose is outside the Ind AS 113 disclosures.
Giving a Level 3 reconciliation for non-recurring items.
Students memorise Level 3 disclosures without the recurring condition.
Fix: The opening-to-closing reconciliation applies only to recurring Level 3 measurements. Non-recurring items need the reason for measurement.
Skipping disclosure for items not carried at fair value, such as investment property under the cost model.
Students assume no fair value work is needed under a cost model.
Fix: Where Ind AS requires fair value to be disclosed, give the level and, for Level 2 and 3, the technique and inputs.
Restating comparatives on transition.
Students carry over the retrospective approach used for accounting policy changes.
Fix: Say prospective from the start of the annual period of initial application, and that the disclosure requirements need not be applied to comparatives for earlier periods. First-time adopters follow Ind AS 101.
Claiming Ind AS 113 differs from IFRS 13 in many measurement rules.
Students assume every Ind AS has big carve-outs.
Fix: State that the measurement framework is aligned and that differences mainly relate to Ind AS terms and cross-references. Quote specific differences only from the study material.
Leaving transfers between Level 1 and 2 without the policy.
Students give only the amounts.
Fix: Disclose the amounts, the reasons and the policy for deciding when the transfer is deemed to have occurred.

Worked examples

Example 1

A Ltd (an Ind AS company) holds three items at the reporting date: (a) quoted equity shares at FVTPL; (b) a building acquired in a business combination during the year and measured at fair value on the acquisition date using observable prices of similar buildings; (c) investment property under the cost model, with fair value determined using unobservable inputs. Identify which are recurring and non-recurring and the disclosure needed for each.

Show the solution

Item (a): FVTPL shares are measured at fair value at every reporting date, so this is a recurring measurement. Quoted prices in an active market make it Level 1.
Disclosure for (a): the fair value at year end and the level. No technique or input details are required for Level 1. Disclose any transfers between Level 1 and 2, with the policy.
Item (b): the fair value measurement on a business combination arises only in particular circumstances, so it is non-recurring. The inputs are observable prices of similar buildings, so it is Level 2. Disclose the fair value, the reason for the measurement, the level, and the valuation technique and inputs.
Item (c): the asset is not measured at fair value in the balance sheet, but its fair value must be disclosed. It uses unobservable inputs, so it is Level 3.
Disclosure for (c): only the level (Level 3), the valuation technique and the inputs used, plus a note if the highest and best use differs from the current use. Quantitative information about significant unobservable inputs is not required because the item is disclosure-only. A recurring-style reconciliation is also not required.

Answer: (a) recurring, Level 1; (b) non-recurring, Level 2, with the reason for measurement and the technique and inputs; (c) not measured at fair value but fair value disclosed, Level 3, so give the level, the technique and inputs, and a highest and best use note if it differs from current use.

Example 2

B Ltd holds unlisted equity shares measured at FVTPL and unlisted debentures measured at FVOCI. All are recurring Level 3 measurements. Opening combined fair value is ₹40,00,000. During the year it bought investments for ₹10,00,000, recognised a gain of ₹6,00,000 in profit or loss on the shares and a loss of ₹2,00,000 in OCI on the debentures. Investments worth ₹4,00,000 were transferred out of Level 3 into Level 2 as inputs became observable. No investments were transferred into Level 3. Prepare the Level 3 reconciliation and state the transition rule.

Show the solution

Start with the opening balance: ₹40,00,000.
Add purchases: ₹40,00,000 + ₹10,00,000 = ₹50,00,000.
Add gain in profit or loss (on the FVTPL shares): ₹50,00,000 + ₹6,00,000 = ₹56,00,000.
Deduct loss in OCI (on the FVOCI debentures): ₹56,00,000 − ₹2,00,000 = ₹54,00,000.
Show transfers into Level 3 on their own line: nil, so the balance stays ₹54,00,000.
Show transfers out of Level 3 on a separate line: ₹54,00,000 − ₹4,00,000 = ₹50,00,000, which is the closing balance.
Also disclose the line items for the gains and losses, the unrealised portion for investments held at year end, the valuation process, and the narrative sensitivity of fair value to unobservable inputs. Disclose the reasons for the transfer and the policy for when a transfer is deemed to occur.
Transition (general rule, separate from the data above): Ind AS 113 is applied prospectively from the start of the annual period of first application. Its disclosure requirements need not be applied to comparative information for periods before initial application. A first-time adopter follows Ind AS 101 for comparatives.

Answer: Closing Level 3 balance is ₹50,00,000 (40,00,000 + 10,00,000 + 6,00,000 − 2,00,000 + nil transfers into Level 3 − 4,00,000 transfers out of Level 3), with the related disclosures. As a general rule, Ind AS 113 applies prospectively and its disclosures need not be given for comparative periods before initial application; first-time adopters follow Ind AS 101.

Exam tips

Write the disclosure answer in two columns in your head: all measurements, then recurring-only extras. This is how markers check completeness.
In MCQs, look for the words recurring, non-recurring and not measured at fair value. Each leads to a different disclosure list.
For a reconciliation, show every movement line and check the total ties to the closing balance before writing the answer.
For transition questions, state two points: prospective application, and that the disclosure requirements need not be applied to comparatives for periods before initial application. Add that first-time adopters follow Ind AS 101.
On differences from IFRS 13, write only what you are sure of from the ICAI material. Say the framework is aligned and refer to Ind AS terminology and cross-references.

Practice questions from Ind AS 113 Fair Value Measurement

Ind AS 113 Disclosures and Differences from IFRS 13 in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

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Ind AS 113 Disclosures and Differences from IFRS 13: frequently asked questions

What is the difference between recurring and non-recurring fair value measurements?

A recurring measurement is required or permitted in the balance sheet at the end of every reporting period, such as FVTPL investments. A non-recurring one arises only in particular circumstances, such as assets acquired in a business combination measured at fair value on the acquisition date. Non-recurring items need the reason for the measurement to be disclosed. Fair value less costs to sell or dispose is outside the Ind AS 113 disclosures.

Is a Level 3 reconciliation needed for every fair value item?

No. It is required only for recurring fair value measurements categorised within Level 3. It shows movements from the opening to the closing balance, including gains and losses in profit or loss and OCI, purchases, sales, settlements, and transfers into and out of Level 3 shown separately.

Is Ind AS 113 applied retrospectively?

No. It is applied prospectively from the start of the annual period in which it is first applied. Its disclosure requirements need not be applied to comparative information for periods before initial application. A first-time adopter follows Ind AS 101 for the comparatives it presents.

How different is Ind AS 113 from IFRS 13?

The measurement framework is closely aligned. Differences are mostly Ind AS terms, cross-references to Ind AS and the effective date, which follows the Companies (Indian Accounting Standards) Rules, 2015. Check the ICAI study material for any specific carve-out before quoting it.