Level 3 reconciliation

Learning objectives

• Prepare the reconciliation from the opening balances to the closing balances of Level 3 measurements by class.L3

Normative references

• IFRS 13 §93Minimum disclosures for each class of assets and liabilities measured at fair value after initial recognition: fair value at the end of the period (and reasons for non-recurring measurements), level of the hierarchy, transfers between Levels 1 and 2 (recurring), valuation techniques and inputs for Levels 2 and 3 with quantitative information about significant unobservable Level 3 inputs, reconciliation of Level 3 balances and unrealised gains or losses (recurring, 93(e) and (f)), description of the Level 3 valuation processes (recurring and non-recurring, 93(g)), sensitivity to unobservable inputs (recurring, 93(h)), difference between highest and best use and current use (93(i)).

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

5 questions

• Valdoren's Level 3 instruments, measured on a recurring basis (case data), have an opening balance of {opening_balance}. During the year: gains recognised in profit or loss {gain_in_profit_or_loss}, gains in other comprehensive income {gain_in_oci}, purchases {purchases}, sales {sales} and transfers into Level 3 {transfers_in}. Compute the closing balance of the reconciliation.L3
• For the Level 3 class 'unlisted securities' (recurring measurements, case data), the balance at the start of the year is {balance_at_start}. Movements for the year: loss in profit or loss {loss_in_profit_or_loss}, gain in other comprehensive income {gain_in_oci}, acquisitions {acquisitions}, settlements {settlements} and transfers out of Level 3 {transfers_out}. What closing balance must the reconciliation show?L3
• The Level 3 reconciliation of a class (recurring measurements, case data) starts from an opening balance of {opening}. Movements for the year: gain in profit or loss {gain_in_pl}, purchases {purchased} and sales {sold}. The published closing balance is {reported_closing}. Compute the unexplained difference (calculated closing balance less published closing balance).L3
• For a Level 3 class measured on a recurring basis (case data), a group publishes a reconciliation that moves from an opening balance of 800 to a closing balance of 950, detailing only profit or loss (+ 60). The year's purchases (+ 120) and sales (− 30) do not appear. What is the error?L3
• Which statements about the reconciliation of recurring Level 3 measurements are consistent with the standard?L3