AC2101 Sem

4. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for ________ costs.
6. The cost approach is a valuation technique that reflects the amount that would be required currently to replace the service capacity of an asset. This amount is also referred to as current ________ cost.
8. In the absence of a principal market, a fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place in the most ________ market for the asset or liability.

1. ________ techniques include the market approach, cost approach and income approach.
2. Risk premium, which is compensation sought by risk-averse market participants for bearing the uncertainty inherent in the cash flows of an asset or a liability, is also referred to as a ‘risk ________’.
3. The ________ approach involves valuation techniques that convert future amounts (eg cash flows or income and expenses) to a single current (ie discounted) amount. The fair value measurement is determined on the basis of the value indicated by current market expectations about those future amounts.
5. An adjustment to a Level 2 input that is significant to the entire measurement might result in a fair value measurement categorised within Level 3 of the fair value hierarchy if the adjustment uses significant ________ inputs.
7. When determining the most advantageous market, transaction costs and ________ costs have to be taken into account.