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Chapter 1

2.5 Markets

Assets and liabilities are sold at different prices in different markets.

IFRS 13 says that fair value should be determined by reference to the
principal market.

This is ‘the market with the greatest volume and level of activity for
the asset or liability’ (IFRS 13, Appendix A).

If the principal market cannot be determined then fair value should be measured
based on the price in the most advantageous market. This is the market maximises
the net amount received when selling an asset (or minimises the net amount paid
when transferring a liability).

Illustrations and further practice

You can now try TYU 3 from Chapter 1

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