Fair value
Fair value
How your property valuations can be fully compliant with HKFRS 13
Property valuations are commonly required for financial reporting purposes. Gary Stevenson explains how they need to meet the upcoming standard on fair value measurement
H
KFRS 13 Fair Value
Measurement provides a single comprehensive source of guidance on how fair value is measured for financial reporting purposes. The standard is applied prospectively for annual periods beginning on or after 1 January 2013 and earlier application is permitted.
Property valuations are commonly required for financial reporting purposes, for example, for investment property, property acquired through a business combination or property being tested for impairment.
Entities often use external valuers to value their property interests. Nonetheless, management is still responsible for the fair value measurements included in the financial statements. They therefore need to assess whether the valuation techniques and assumptions used by external valuers comply with HKFRS 13. This will require an understanding of the main requirements of the standard relevant to property valuations.
Definition of fair value under HKFRS 13 and
International Valuation Standards
Fair value under HKFRS 13 is a different concept to fair value as defined in
International Valuation Standards.
Rather, the concept of market value as defined in IVS will generally meet the fair value measurement requirement under HKFRS 13 subject to certain specific assumptions which are required by the standard. Management should be aware of this difference in concepts when communicating with external valuers in
46
December 2012
order to ensure that property valuations are
The highest and best use of the property suitable for financial reporting purposes. should be physically possible, legally permissible and financially feasible. The use
Which characteristics of the property of a property does
How your property valuations can be fully compliant with HKFRS 13
Property valuations are commonly required for financial reporting purposes. Gary Stevenson explains how they need to meet the upcoming standard on fair value measurement
H
KFRS 13 Fair Value
Measurement provides a single comprehensive source of guidance on how fair value is measured for financial reporting purposes. The standard is applied prospectively for annual periods beginning on or after 1 January 2013 and earlier application is permitted.
Property valuations are commonly required for financial reporting purposes, for example, for investment property, property acquired through a business combination or property being tested for impairment.
Entities often use external valuers to value their property interests. Nonetheless, management is still responsible for the fair value measurements included in the financial statements. They therefore need to assess whether the valuation techniques and assumptions used by external valuers comply with HKFRS 13. This will require an understanding of the main requirements of the standard relevant to property valuations.
Definition of fair value under HKFRS 13 and
International Valuation Standards
Fair value under HKFRS 13 is a different concept to fair value as defined in
International Valuation Standards.
Rather, the concept of market value as defined in IVS will generally meet the fair value measurement requirement under HKFRS 13 subject to certain specific assumptions which are required by the standard. Management should be aware of this difference in concepts when communicating with external valuers in
46
December 2012
order to ensure that property valuations are
The highest and best use of the property suitable for financial reporting purposes. should be physically possible, legally permissible and financially feasible. The use
Which characteristics of the property of a property does