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

Under Ind AS 113, fair value of an asset is best described as:

Fair value under Ind AS 113 is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. It is an exit price, not historical cost or a forced-sale price.

  1. AThe price that would be received to sell the asset in an orderly transaction between market participants at the measurement dateCorrect
  2. BThe price originally paid by the entity to acquire the asset, adjusted for depreciation
  3. CThe price the entity expects to receive by selling the asset in a forced liquidation
  4. DThe price at which the entity would buy a similar asset from its own preferred supplier

Explanation

Ind AS 113 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Historical cost less depreciation is a cost-based figure, and forced liquidation is not an orderly transaction.

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