Accounting · IFRS 13 Fair Value Measurement
Oak Co owns a property that it measures at fair value in accordance with IFRS Accounting Standards. Oak Co is unsure whether it should determine fair value: Method 1: Using an observable market price for a similar property in the same location, adjusted for differences Method 2: By discounting its future cash flow projections related to the property using the rate at which it could obtain borrowings Which statement best reflects the requirements of IFRS 13 Fair Value Measurement?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Neither method 1 nor 2 is appropriate; Oak Co must use quoted prices in an active market to determine fair value.
- 2Where more than one method is available to measure fair value, an average of the fair value determined under both methods should be taken.
- 3Method 1 is most appropriate because it uses level 2 rather than level 3 inputs.✓
- 4Method 2 is most appropriate because it is entity specific to Oak Co.
Correct answer
Method 1 is most appropriate because it uses level 2 rather than level 3 inputs.
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