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Fair value measurement


In September 2005, the IASB decided to include on the agenda a project aimed at clarifying the concept of fair value and to provide guidance for its application in the context of IFRSs.
The IASB project on fair value measurement is included in the Memorandum of Understanding with the FASB.
The financial crisis of 2008 highlighted the importance of IFRSs and U.S. GAAPs having a common guidance on the assessment of fair value, with particular reference to the measurement of fair value where markets are illiquid. This gave an acceleration in the work of the IASB and the FASB, in line with the recommendations of the G20, the Financial Stability Board and the Financial Crisis Advisory Group (made up of the IASB and the FASB).
In the light of comments received on both the Discussion Paper 2006 and the Request for Views, the IASB published in May 2009, Exposure Draft (ED) Fair Value Measurement, in consultation until 28 September 2009.


The project objectives are:
– to clarify the definition of fair value;
– to establish a single framework for measuring fair value applicable to IFRSs that require the measurement criterion of fair value;
– to provide explanations and application guidances for the determination of fair value (even where markets are illiquid or inactive).


The IASB has proposed replacing the guidelines currently contained in several international accounting standards, about the measurement of fair value, with a single principle for its measurement and the disclosures to be included. The document provides an unambiguous definition of fair value.
An entity should therefore provide information to users of the financial statements to understand the valuation techniques and inputs used to measure the fair value of an asset or a liability.
The IASB proposal deals with the criteria used to estimate fair value in the absence of market data.

IASB work plan

On 12 May 2011, the IASB issued IFRS 13 Fair Value Measurement.

For more information, please refer to the IASB website.

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