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

Which feature of the Ind AS 113 definition of fair value makes it a market-based measure rather than an entity-specific one?

The definition refers to the price in an orderly transaction between market participants at the measurement date. This frames fair value from the market's perspective, not from the entity's own cost, intentions or value in use.

  1. AIt refers to the price in an orderly transaction between market participants at the measurement dateCorrect
  2. BIt refers to the price the reporting entity paid at initial recognition
  3. CIt refers to the value in use to the reporting entity's management
  4. DIt refers to the cost of replacing the asset from the entity's own supplier

Explanation

The definition is framed around market participants and an orderly transaction at the measurement date, not the entity's own intentions. Entity-specific value in use or purchase cost are not part of the definition.

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