pencilFRS 113 is effective for financial periods beginning 1 January 2013. Under this new standard, many old concepts regarding fair value has been changed.

Fair value 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.




  • Requirements for fair value measurements and related disclosures disperses across various FRSs
  • Issued to consolidate measurement guidance from various FRSs into one standard, covering both financial and non-financial items

Key changes:

  • Introduce a fair value hierarchy for non-financial assets and liabilities
  • Far value of liabilities to be determined based on the assumption that the liability will be transferred, rather than otherwise settled or extinguished
  • Removal of requirement to use bid and ask prices for actively-quoted assets and liabilities
  • Requires clearer and more enhanced disclosures requirements

 Guidance on Fair Value measurement:

  1. Take into account the characteristics of assets/liabilities that a market participant will take into account at measurement date
  2. Assumes an orderly transaction between the market participants at the measurement date under current market conditions
  3. For non-financial asset, takes into account its highest and best use
  4. For liability, reflects non-performance risk including own credit risk


  1. Apply to all assets and liabilities measured at fair value
  2. Hierarchy level into which fair value measurements fall, split between recurring and non-recurring
  3. Methods and inputs to the fair value measurements
  4. Analysis of assets and liabilities not measured at fair value but for which fair value is disclosed (eg non-current receivables, obligations under finance leases
  5. Transfers between Level 1 & 2 and its rationale
  6. Additional disclosures for Level 3 measurements