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

Kaveri Textiles Ltd. owes a liability that it could transfer to a market participant. Under the Ind AS 113 definition of fair value, the liability is measured at which of the following?

A liability's fair value under Ind AS 113 is the price that would be paid to transfer it in an orderly transaction between market participants at the measurement date. The asset wording about receiving a sale price does not apply to liabilities.

  1. AThe price that would be received to sell it at the measurement date
  2. BThe price that would be paid to transfer it in an orderly transaction between market participants at the measurement dateCorrect
  3. CThe amount the entity originally received when the liability was first incurred
  4. DThe amount the entity expects to settle personally over the coming years

Explanation

The definition says fair value is the price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Option A is the asset wording and is wrong for a liability. The original proceeds and the entity's own expected settlement are not the measure in the definition.

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