IAS 36: fair value less costs of disposal

Learning objectives

• Calculate fair value less costs of disposal: fair value under IFRS 13 (without transaction costs), then deduction of the costs of disposal.L3

Normative references

• IFRS 13 §6Excluded from both the measurement and disclosure requirements: share-based payments (IFRS 2), leasing transactions (IFRS 16) and measurements that have some similarities to fair value but are not fair value (net realisable value in IAS 2, value in use in IAS 36).
• IFRS 13 §7Exemption from the disclosure requirements only (measurement remains governed by the Standard) for plan assets of employee benefit plans (IAS 19), retirement benefit plan investments (IAS 26) and assets whose recoverable amount is fair value less costs of disposal (IAS 36).

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

3 questions

• For an impairment test, the recoverable amount under IAS 36 is the higher of two amounts. Which one reflects the assumptions of market participants rather than factors specific to the entity?L3
• For an impairment test, the fair value of a unit, determined under IFRS 13 in its principal market, is {fair_value}. Costs of disposal not already recognised as liabilities (legal fees and transaction duties of the planned sale) amount to {costs_of_disposal}. Compute fair value less costs of disposal.L3
• A group shows in its fair value table, in Level 3, the value in use of an asset tested for impairment. What is the error?L3