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CA Final · Financial Reporting · Ind AS 113 Fair Value Measurement

Godavari Infra Ltd's CFO discusses three statements about the Ind AS 113 definition of fair value. (i) Fair value is the price received to sell an asset. (ii) Fair value for a liability is the price paid to transfer it. (iii) The price is determined at the date of the last annual audit, irrespective of the reporting date. Further, the definition requires the transaction to be between market participants. Which combination is consistent with the definition?

Only statements (i) and (ii) are consistent. Fair value is the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A price fixed at the last audit date rather than the measurement date does not fit.

  1. A(i) and (ii) only, with the price being at the measurement dateCorrect
  2. B(i) and (iii) only
  3. C(ii) and (iii) only
  4. D(i), (ii) and (iii)

Explanation

The definition states the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Statements (i) and (ii) match. Statement (iii) contradicts the requirement that the price be at the measurement date, so options including it are wrong.

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