IFRS 13 · IAS 36 · audit
Fair value and impairment for financial statements
The auditor asks for evidence for the number in the balance sheet. We prepare a fair value measurement or an impairment test in a format the auditor can check quickly.
We reply on the next working day. We name the fee in writing, in our reply to your inquiry. Scope and timing are confirmed in writing before work starts.
01Standard
Fair value under IFRS 13
IFRS 13 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. It is an exit price, from the market's perspective, not the value to a particular owner.
The standard classifies inputs into three levels: quoted prices in an active market, other observable inputs and unobservable inputs. When there is no active market, Level 3 inputs are used, so the justification of the assumptions is decisive.
02Standard
Impairment test under IAS 36
IAS 36 requires that the carrying amount of an asset not exceed its recoverable amount. The recoverable amount is the higher of two amounts: fair value less costs of disposal and value in use.
Goodwill, intangible assets with an indefinite useful life and intangible assets not yet available for use are tested every year; other assets when there are indications of impairment (IAS 36.9-10).
IIWhat you get
What you get
- 01
A report with the methodology, the level of inputs and a sensitivity analysis
- 02
An Excel model for the auditor
- 03
Text for the notes to the financial statements
IVMethodology
It is an exit price, from the market's perspective, not the value to a particular owner.
VIFee
Fee and timing in writing, before work starts
No hourly billing. We name the fee in writing, in our reply to your inquiry. What is not included is listed in the written proposal.
VIISources and legal framework
Primary sources
- IVSC - International Valuation Standards (effective 31 January 2025)
- RICS - Valuation Global Standards (Red Book), published November 2024, effective 31 January 2025
- IFRS Foundation - IFRS 13 Fair Value Measurement
- IFRS Foundation - IAS 36 Impairment of Assets
- IVSC - IVS free to access since 31 January 2025
VIIIQuestions
Questions clients ask about this topic
Does the auditor accept a third-party valuation?
The auditor assesses whether the valuation is appropriate. That is why we provide the model and the reasoning for every assumption, so that the review is quick.
When is an impairment test done?
Every year for goodwill, intangible assets with an indefinite useful life and intangible assets not yet available for use; for other assets when there are indications of impairment (IAS 36.9-10).
IXNext step
Tell us what is being valued and for whom.
office@schule.co.me · Phone +382 67 338 777 · By appointment, Mon-Fri 07:00-15:00 (Podgorica time)