Page 28 - PowerPoint Presentation

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).