IAS 38: active market

Learning objectives

• Assess whether the definition of an active market permits the revaluation of an intangible asset.L3

Normative references

• IFRS 13 §76Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
• IFRS 13Appendix A: definitions of the terms used in the Standard (active market, cost approach, entry price, exit price, expected cash flow, fair value, highest and best use, income approach, inputs, Level 1 to Level 3 inputs, market approach, market-corroborated inputs, market participants, most advantageous market, non-performance risk, observable inputs, orderly transaction, principal market, risk premium, transaction costs, transport costs, unit of account, unobservable inputs). Market participants are defined as independent, knowledgeable, able and willing to enter into a transaction.

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

2 questions

• An entity considers applying the revaluation model to a freely transferable fishing licence, an intangible asset. Which condition of IAS 38 must be met?L3
• A group revalues an acquired brand relying on the price of a few sales of brands from other sectors, concluded rarely and case by case. What is the error?L3