Skip to content

CMA Final · Corporate Financial Reporting · Fair Value Measurement (Ind AS 113)

Kaveri Ltd must measure the fair value of a liability at 31 March. Which statement follows from the Ind AS 113 definition?

The fair value of a liability is the price that would be paid to transfer it in an orderly transaction between market participants at the measurement date. Original proceeds or the undiscounted contractual amount do not represent this transfer price.

  1. AIt is the price that would be paid to transfer the liability in an orderly transaction between market participants at the measurement dateCorrect
  2. BIt is the amount the entity originally received when the liability arose
  3. CIt is the price the entity would pay to settle the liability early with its creditor only
  4. DIt is the undiscounted amount payable under the contract

Explanation

The definition states fair value of a liability is the price paid to transfer it in an orderly transaction between market participants at the measurement date. The original proceeds and the undiscounted contractual amount are not transfer prices at that date.

Did you get it right without looking?

One question tells you little. A timed set on Fair Value Measurement (Ind AS 113) shows your real accuracy, how long you take and where you lose marks.

Practise Fair Value Measurement (Ind AS 113)Free diagnostic mock

More Fair Value Measurement (Ind AS 113) questions