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

Himalaya Foods Ltd owns land and wants to measure its fair value at 31 March 2026. Which of the following measurement descriptions fits the definition of fair value in Ind AS 113?

Fair value of the land is the price that would be received to sell it in an orderly transaction between market participants at the measurement date, 31 March 2026. Past purchase prices, distress-sale prices, or prices based on the entity's own plans do not meet this definition.

  1. AA price that would be received to sell the land in an orderly transaction between market participants on 31 March 2026Correct
  2. BA price at which Himalaya bought similar land on the date of purchase, regardless of the measurement date
  3. CA price that would be received if Himalaya had to sell the land immediately under distress
  4. DA price that Himalaya alone would pay to acquire the land, based on its own plans

Explanation

The definition has three key features: an exit price (received to sell), an orderly transaction between market participants, and the measurement date. Only the first option matches all three. A distress sale is not orderly, and a past purchase price is not tied to the measurement date.

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