Appendix A (AASB13_08-15_COMPmar20_07-21)

A market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

A valuation technique that reflects the amount that would be required currently to replace the service capacity of an asset (often referred to as current replacement cost).

The price paid to acquire an asset or received to assume a liability in an exchange transaction.

The price that would be received to sell an asset or paid to transfer a liability.

The probability-weighted average (ie mean of the distribution) of possible future cash flows.

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.

The use of a non-financial asset by market participants that would maximise the value of the asset or the group of assets and liabilities (eg a business) within which the asset would be used.

Valuation techniques that convert future amounts (eg cash flows or income and expenses) to a single current (ie discounted) amount. The fair value measurement is determined on the basis of the value indicated by current market expectations about those future amounts.

The assumptions that market participants would use when pricing the asset or liability, including assumptions about risk, such as the following:

(a)            the risk inherent in a particular valuation technique used to measure fair value (such as a pricing model); and

(b)           the risk inherent in the inputs to the valuation technique.

Inputs may be observable or unobservable.

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Unobservable inputs for the asset or liability.

A valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable (ie similar) assets, liabilities or a group of assets and liabilities, such as a business.

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Buyers and sellers in the principal (or most advantageous) market for the asset or liability that have all of the following characteristics:

(a)            They are independent of each other, ie they are not related parties as defined in AASB 124, although the price in a related party transaction may be used as an input to a fair value measurement if the entity has evidence that the transaction was entered into at market terms.

(b)            They are knowledgeable, having a reasonable understanding about the asset or liability and the transaction using all available information, including information that might be obtained through due diligence efforts that are usual and customary.

(c)            They are able to enter into a transaction for the asset or liability.

(d)            They are willing to enter into a transaction for the asset or liability, ie they are motivated but not forced or otherwise compelled to do so.

The market that maximises the amount that would be received to sell the asset or minimises the amount that would be paid to transfer the liability, after taking into account transaction costs and transport costs.

The risk that an entity will not fulfil an obligation. Non-performance risk includes, but may not be limited to, the entity’s own credit risk.

Inputs that are developed using market data, such as publicly available information about actual events or transactions, and that reflect the assumptions that market participants would use when pricing the asset or liability.

A transaction that assumes exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction (eg a forced liquidation or distress sale).

The market with the greatest volume and level of activity for the asset or liability.

Compensation sought by risk-averse market participants for bearing the uncertainty inherent in the cash flows of an asset or a liability. Also referred to as a ‘risk adjustment’.

The costs to sell an asset or transfer a liability in the principal (or most advantageous) market for the asset or liability that are directly attributable to the disposal of the asset or the transfer of the liability and meet both of the following criteria:

(a)            They result directly from and are essential to that transaction.

(b)            They would not have been incurred by the entity had the decision to sell the asset or transfer the liability not been made (similar to costs to sell, as defined in AASB 5).

The costs that would be incurred to transport an asset from its current location to its principal (or most advantageous) market.

The level at which an asset or a liability is aggregated or disaggregated in a Standard for recognition purposes.

Inputs for which market data are not available and that are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability.