Editing Fair value (section)

=== <span class="anchor" id="IFRS 13"></span>International standards (IFRS) ===
{{See also|IFRS 7#Fair value measurement|Valuation risk}}
'''IFRS 13''', ''Fair Value Measurement'', was adopted by the [[International Accounting Standards Board]] on May 12, 2011.<ref name=duff>{{cite web|title=IFRS 13 Fair Value Measurement: What does this mean for valuation?|publisher=[[Duff & Phelps]]|url=http://www.duffandphelps.com/sitecollectiondocuments/articles/vFIN_DP111217_2011_ICAEW_Article.pdf|access-date=2012-08-09|url-status=dead|archive-url=https://web.archive.org/web/20130418075250/http://www.duffandphelps.com/SiteCollectionDocuments/Articles/vFIN_DP111217_2011_ICAEW_Article.pdf|archive-date=2013-04-18}}</ref> IFRS 13 provides guidance for how to perform fair value measurement under IFRS and became effective on January 1, 2013.<ref name=duff/> The guidance has been converged with US GAAP.<ref name="FASB">{{cite web|title=IASB AND FASB ISSUE COMMON FAIR VALUE MEASUREMENT AND DISCLOSURE REQUIREMENTS|publisher=[[FASB]]|url=https://www.fasb.org/cs/ContentServer?cid=1176158544944&d=&pagename=FASB%2FFASBContent_C%2FNewsPage}}</ref>  IFRS defines fair value 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."<ref name="ifrs">{{cite web|title=IFRS 13.9 and IFRS 13 Defined Terms |publisher=ifrs.org|url=http://www.ifrs.org/issued-standards/list-of-standards/ifrs-13-fair-value-measurement/}}</ref> As a result,<ref name="duff" /> IFRS 13 requires entities to consider the effects of [[credit risk]] when determining a fair value measurement, e.g. by calculating a [[credit valuation adjustment]] (CVA) or [[XVA|debit valuation adjustment]] (DVA) on their [[Derivative (finance)|derivatives]];<ref name="ey">{{cite web|title=Credit valuation adjustments for derivative contracts|publisher=[[Ernst & Young]]|url=http://www.ey.com/Publication/vwLUAssets/EY-credit-valuation-adjustments-for-derivative-contracts/$FILE/EY-Applying-FV-April-2014.pdf/}}</ref>
see {{slink|XVA#Accounting impact}}

While ASC 820 and IFRS 15 have been converged and so provide comparable guidance, US GAAP and IFRS apply this guidance in different ways.  For example, under US GAAP (ASC 360), entities are not allowed present any property, plant or equipment at fair value.  Under IFRS, IAS 16 allows entities to choose between a cost (IAS 16.30) and revaluation  (IAS 16.31 to 42) model.  If an entity applies the revaluation model, it will measure and report its property plant and equipment at fair value on its balance sheet. It will report the changes in fair value in comprehensive income and accumulate them as a "revaluation surplus" in equity.  With respect to investment property (real property held for rent or sale), IFRS takes an additional step. IAS 40.32 requires all entities to measure investment property at fair value.  An entity may choose to report this fair value on its balance sheet (fair value model) or disclose it in the footnotes (cost model). If the entity chooses to apply the fair value model, "A gain or loss arising from a change in the fair value of investment property shall be recognised in profit or loss for the period in which it arises." (IAS 40.35). Depending on the choices made, the financial results of an entity applying IFRS may significantly differ from the financial results of an otherwise comparable entity applying US GAAP.