The entity's intention is irrelevant

Learning objectives

• Explain why the intention to hold or dispose of an item does not affect its fair value.L2

Normative references

• IFRS 13 §3When a price for an identical item is not observable, the entity uses another valuation technique that maximises the use of relevant observable inputs; because fair value is based on market participant assumptions (including about risk), the entity's intention to hold an asset or to settle or otherwise fulfil a liability is not relevant.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• If the entity intends to keep an asset until the end of its useful life, that intention reduces the asset's fair value compared with the market exit price.L2
• Savelin holds securities whose sale in their principal market would bring in 50,000 at the reporting date. Management plans to hold them for five years and proposes to measure them at 42,000 "since we will not sell them". Which amount represents fair value?L2