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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