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IFRS 13

Elements of fair value measurement

Orderly transaction – Example

Solution:

• The definition (IFRS13.9) of fair value determines that the
transaction used to determine fair value should be orderly.

• An orderly transaction is defined as 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 a
transaction involving such an asset or liability: it is not a forced
transaction.

• The circumstances clearly indicate that the seller was in financial
distress and the transaction did not occur under normal conditions.
• Bekele would place little, if any, weight on the transaction and

rather consider the other transactions that took place during the
financial year.
• The fair value per share is determined at R200 per share.

• Conclusion: The fair value of the investment in unlisted shares of
Kiplagat Ltd is (1 500 x R200) R300 000.

• Fair value hierarchy: Level 2

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