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ACCA Strategic Professional · Strategic Business Reporting (International) · Fair value measurement

Marlow plc is the acquirer in a business combination and issues its own ordinary shares as consideration. No separate asset exists for the shares in the market, but they are quoted on an active market. Which statement is correct about measuring the fair value of these own equity instruments under IFRS 13 and IFRS 3?

The shares issued as consideration are measured at their acquisition-date fair value, which is the quoted price of Marlow's shares on that date, a Level 1 input under IFRS 13. Nominal value, announcement price or book value are not used.

  1. AThe shares are measured at nominal value because equity is not remeasured
  2. BThe consideration is measured at the acquisition-date fair value, using the quoted price of Marlow's shares at that date as a Level 1 inputCorrect
  3. CThe shares are measured at their price at the date the deal was announced, even if different at acquisition
  4. DThe shares are measured at the acquirer's book value per share

Explanation

IFRS 3 measures consideration transferred at acquisition-date fair value. For quoted own equity, the quoted price on that date is a Level 1 input under IFRS 13. Nominal value, announcement date price and book value are not the required measure.

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