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

Under the definition of fair value in Ind AS 113, the price for a liability is measured as the price that would be:

For a liability, fair value is the price that would be paid to transfer it in an orderly transaction between market participants at the measurement date. It is an exit price at that date, not a settlement or original incurrence amount.

  1. Areceived to assume the liability from the creditor
  2. Bpaid to transfer the liability in an orderly transaction between market participants at the measurement dateCorrect
  3. Cpaid to settle the liability with the counterparty at its carrying amount
  4. Dpaid to transfer the liability by the entity at the date it was originally incurred

Explanation

The definition states fair value is the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. Settlement with the counterparty at carrying amount or the original incurrence date are not the measurement basis. Receiving a price applies to assets, not liabilities.

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