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

Which of the following best describes the market participants whose assumptions are used in an IFRS 13 fair value measurement?

Market participants are independent, knowledgeable buyers and sellers who are able and willing to transact in the relevant market and are not related to the reporting entity. They need not be specifically identified, and management's own assumptions do not determine fair value.

  1. ASpecific named buyers who have already approached the reporting entity
  2. BIndependent, knowledgeable parties willing and able to transact, who are not related parties of the entityCorrect
  3. COnly entities in the same industry as the reporting entity, whether related or not
  4. DThe entity's management, since they know the asset best

Explanation

IFRS 13 defines market participants as buyers and sellers in the principal or most advantageous market who are independent of the entity, knowledgeable, able and willing to transact, and motivated but not forced. They need not be identified individually. Management's own views and related-party deals do not define fair value.

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