Fair Value and Fair Presentation of Financial Statements Assignment

Fair Value and Fair Presentation of Financial Statements - Assignment Example As per the requirements of IFRS 5, 'the assets that are held for sale are to measured at the lower of carrying amount and fair value fewer costs to sell' (IASB, n.d.). This means that the asset should be marketed for sale at a price which is arrived by considering the fair value of the asset. This ensures that financial statements provide a more realistic figure for fixed assets that are held for sale. IAS 16 provides accounting treatment of property, plant, and equipment and their revaluation for the purpose of financial reporting. As per the standard, 'after recognition as an asset, an item of property, plant and equipment whose fair value can be measured reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses' (IASB, n.d.). This shows that the standard requires assets to be represented in financial statements at their fair value as a true representation of their actual value at the time of balance sheet development. This standard deals with recognition, measurement, and revaluation of an intangible asset. An intangible asset is a non-monetary asset and has no physical form. The standard requires a revaluation of the intangible asset at the 'fair value at the date of revaluation less any  accumulated amortization and any subsequent accumulated impairment losses' (IASB, n.d.). The fair value is determined with reference to active markets where the prices are available to the public, buyers and sellers are available, and items are traded in a homogenous way. In addition to the above, IAS 32 and IAS 39 require the use of fair value for measuring and presenting the value of financial assets and financial liabilities.