Level 3 process and sensitivity

Learning objectives

• Explain the Level 3 valuation process and the disclosure about sensitivity to unobservable inputs.L4

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.

2 questions

• For recurring Level 3 measurements, what information about unobservable inputs does the entity provide in addition to the reconciliation of balances?L4
• For its recurrently measured Level 3 assets, a group publishes the fair value, the technique and the reconciliation of balances, but nothing on the sensitivity of the measurement to unobservable inputs. What is the reviewer's conclusion?L4