CERTYNEX IFRS ACADEMY

For units in an unquoted fund, with no observable transaction, Ivrelle writes in its note: « Lacking an active market, our objective is no longer an exit price: we use the value the units have for us, without a risk premium, as we do not intend to sell them. » What is the error?

The objective remains an exit price for a market participant; unobservable inputs reflect its assumptions, including about risk.

There is no error: without observable inputs, the entity uses its own assumptions, as they are and without testing them against the market.

The error is to measure the units at fair value: without an active market, they must remain measured at their acquisition cost.

The error concerns only the risk premium; using the value of the units to the entity remains acceptable at Level 3.