Item held by another party as an asset

Learning objectives

• Analyse how the price of the item held by another party as an asset is used to measure the liability or equity instrument.L3

Normative references

• IFRS 13 §37When no quoted price is available for the transfer of an identical or similar liability or equity instrument, and the identical item is held by another party as an asset, the entity measures it from the perspective of the market participant that holds it as an asset at the measurement date.
• IFRS 13 §38In that case, the entity uses, in order: the quoted price in an active market for the identical item held as an asset; failing that, other observable inputs (for example a price in a market that is not active); failing that, another valuation technique, based on the income approach or the market approach.
• IFRS 13 §39The price of the asset held by another party is adjusted only for factors specific to that asset that do not apply to the liability or instrument (an item that is only similar, a different unit of account, for example a third-party credit enhancement included in the price); that price shall not reflect the effect of a restriction preventing the sale of the asset.

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

2 questions

• No quoted price exists for the transfer of one of the entity's liabilities, but an identical item, held as an asset by another party, is quoted in an active market. What does the entity do to measure its liability?L3
• Pelisanne issued a bond. A third party holds an identical security as an asset, quoted at 98 per 100 of nominal. This price includes a feature specific to the asset held that does not apply to the corresponding liability and that raises the price by 3 (case data). Which price does Pelisanne use for its liability, per 100 of nominal?L3