| 11.26 | If, in a subsequent period, the amount of an impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the entity shall reverse the previously recognised impairment loss either directly or by adjusting an allowance account. The reversal shall not result in a carrying amount of the financial asset (net of any allowance account) that exceeds what the carrying amount would have been had the impairment not previously been recognised. The entity shall recognise the amount of the reversal in profit or loss immediately. |
| 11.27 | [Moved to paragraph 2A.1] |
| 11.28 | [Moved to paragraph 2A.2] |
| 11.29 | [Moved to paragraph 2A.3] |
| 11.30 | [Moved to paragraph 2A.4] |
| 11.31 | [Moved to paragraph 2A.5] |
| 11.32 | [Moved to paragraph 2A.6] [AMD 313] |
| AMD 313 Amendment Paragraphs 11.27-11.32 amended by Amendments to FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental improvements and clarifications (issued December 2017) Effective date 01/01/2019 Previous text Fair value 11.27 Paragraph 11.14(b) and other sections of this FRS make reference to the fair value guidance in paragraphs 11.27 to 11.32, including Section 9 Consolidated and Separate Financial Statements, Section 12 Other Financial Instruments Issues, Section 13 Inventories, Section 14 Investments in Associates, Section 15 Investments in Joint Ventures, Section 16 Investment Property, Section 17 Property, Plant and Equipment, Section 18 Intangible Assets other than Goodwill, Section 27 Impairment of Assets, Section 28 Employee Benefits (in relation to plan assets) and Section 34 Specialised Activities. In applying the fair value guidance to assets or liabilities accounted for in accordance with those sections, the reference to ordinary shares or preference shares in these paragraphs should be read to include the types of assets and liabilities addressed in those sections. Paragraph 11.14(d)(i) requires an investment in non-convertible preference shares and non-puttable ordinary shares or preference shares to be measured at fair value if the shares are publicly traded or if their fair value can otherwise be measured reliably. An entity shall use the following hierarchy to estimate the fair value of the shares: (a) The best evidence of fair value is a quoted price for an identical asset in an active market. Quoted in an active market in this context means quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted price is usually the current bid price. (b) When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If the entity can demonstrate that the last transaction price is not a good estimate of fair value (eg because it reflects the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distress sale), that price is adjusted. (c) If the market for the asset is not active and recent transactions of an identical asset on their own are not a good estimate of fair value, an entity estimates the fair value by using a valuation technique. The objective of using a valuation technique is to estimate what the transaction price would have been on the measurement date in an arm's length exchange motivated by normal business considerations. Valuation technique 11.28 Valuation techniques include using recent arm's length market transactions for an identical asset between knowledgeable, willing parties, if available, reference to the current fair value of another asset that is substantially the same as the asset being measured, discounted cash flow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the asset and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the entity uses that technique. 11.29 The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm's length exchange motivated by normal business considerations. Fair value is estimated on the basis of the results of a valuation technique that makes maximum use of market inputs, and relies as little as possible on entity-determined inputs. A valuation technique would be expected to arrive at a reliable estimated of the fair value if: (a) it reasonably reflects how the market could be expected to price the asset; and (b) the inputs to the valuation technique reasonably represent market expectations and measures of the risk return factors inherent in the asset. No active market 11.30 The fair value of an asset that does not have a quoted market price in an active market is reliably measurable if: (a) the variability in the range of reasonable fair value estimates is not significant for that asset; or (b) the probabilities of the various estimates within the range can be reasonably assessed and used in estimating fair value. 11.31 There are many situations in which the variability in the range of reasonable fair value estimates of assets that do not have a quoted market price is likely not to be significant. Normally it is possible to estimate the fair value of ordinary shares or preference shares that an entity has acquired from an outside party. However, if the range of reasonable fair value estimates is significant and the probabilities of the various estimates cannot be reasonably assessed, an entity is precluded from measuring the ordinary shares or preference shares at fair value. 11.32 If a reliable measure of fair value is no longer available for an asset measured at fair value (eg ordinary shares or preference shares measured at fair value through profit or loss), its carrying amount at the last date the asset was reliably measurable becomes its new cost. The entity shall measure the asset at this cost amount less impairment until a reliable measure of fair value becomes available. |
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