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IFRS 13

Elements of fair value measurement

Debentures

• On 1 January 20.12, Serviplex issued 100 000 7% debentures of R20 each in the open market
for R1 922 000. The debentures are redeemable at par on 31 December 20.16 and the interest

is payable annually in arrears. The market in which these debentures are traded became
inactive and one cannot rely on quoted prices or on the market prices of similar instruments.
On 31 December 20.13, the risk free rate was considered to be 7% and the risk premium for

non-performance was estimated to be 2%.

Foreign exchange contract

• On 1 November 20.13, Serviplex entered into a foreign exchange contract to buy $708 000 at
R7,60 on 31 January 20.14 in order to settle an existing foreign creditor. On 31 December

20.13 the spot exchange rate was R7,70 for $1 and foreign exchange contracts expiring on 31
January 2014 was quoted at R7,80.

REQUIRED

• Provide the fair value measurement note to the annual financial statements of

Serviplex Ltd at 31 December 20.13, in accordance with IFRS 13.93 (a), (b) and

(d).
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