No blockage factor

Learning objectives

• Assess whether an adjustment to a Level 1 price is permitted and apply the rule of the quoted price multiplied by the quantity held.L4

Normative references

• IFRS 13 §79A Level 1 input is adjusted only in three cases: a large number of similar items whose individual prices are not readily accessible (an alternative method, for example matrix pricing); a quoted price that does not represent fair value at the measurement date (events occurring after the close of the market); a liability or equity instrument measured using the price of the identical item held as an asset that requires an adjustment. Any adjustment results in a lower level categorisation.
• IFRS 13 §80An entity's holding of a single asset or liability quoted in an active market is measured as the quoted price multiplied by the quantity held, even if the market's normal daily trading volume is not sufficient to absorb the quantity.

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

2 questions

• Tarvel holds 500,000 shares of a company listed in an active market, whereas the average daily trading volume is 40,000 shares. A controller examines four proposed treatments. Which one is wrong?L4
• A company holds 120,000 shares of an issuer listed in an active market. The closing price is 18.50 per share and the average daily trading volume is 15,000 shares. What is the fair value of the position?L4