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IFRS 13 Fair Value Measurement

IFRS 13 Fair Value Measurement defines fair value, sets out in a single IFRS a framework for measuring fair value, and requires disclosures about fair value measurements.

Published May 2011. Effective 1 January 2013. 

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Financial Reporting Faculty members get full access. Login to get the version of the standard relevant to specific time periods via eIFRS.

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*UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.


With limited exceptions, IFRS 13 applies where another IFRS requires or allows fair value measurements or disclosures about fair value measurements. The new standard provides guidance on establishing fair values and introduces consistent disclosure requirements.

Fair value is defined by IFRS 13 as ‘the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.’

IFRS 13 indicates that when measuring fair value, the following must be considered:

  • The asset or liability being measured, including its condition, location and any restrictions on sale
  • The principal (or most advantageous) market in which an orderly transaction would take place for the asset or liability
  • For a non-financial asset, the highest and best use of the asset and whether the asset is used in combination with other assets or on a stand-alone basis
  • The assumptions that market participants would use when pricing the asset or liability.

The standard provides a hierarchy of methods (‘the fair value hierarchy’) for arriving at fair value, with Level 1 being the preferable method where available:

  • Level 1 unadjusted quoted prices for identical assets and liabilities in active markets.
  • Level 2 other observable inputs for the asset or liability such as quoted prices in active markets for similar assets or liabilities or quoted prices for identical assets or liabilities in markets which are not active.
  • Level 3 unobservable inputs developed by an entity using the best information available where there is little or no market activity for the asset or liability at the measurement date.

IFRS 13 also requires extensive disclosures to help users of the financial statements assess:

  • valuation techniques and inputs used to measure fair values
  • for fair value measurements which are regularly updated (such as those in relation to investment properties) and which use significant level 3 inputs, the effect of the measurements on profit or loss or other comprehensive income for the period.

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Recent amendments

Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.

*Not EU endorsed as at 7 June 2017. Read more on EU Endorsement.

Current proposals

The IASB has initiated a post-implementation review of IFRS 13 and a Request for Information was issued in May 2017.

UK reduced disclosures

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Find out more on which entities qualify and the criteria to be met.

Amendments to the standard

There are no amendments to IFRS 13 in order to comply with the Companies Act or related Regulations.

Disclosure exemptions

FRS 101 paragraph 8(e) states that a qualifying entity is exempt from all of the disclosure requirements of IFRS 13 with the following limitations.

  • Equivalent disclosures must be made in the consolidated financial statements of the group in which the entity is consolidated.
  • A financial institution may not use the exemption from IFRS 13 in relation to financial instruments, but may use it in relation to other assets and liabilities.
  • Non-financial institutions must make additional disclosures if certain financial instruments are measured at fair value.

IFRS 13 paragraphs for which exemption is available: 91-99.

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This page was last updated 7 June 2017