Fair Value Measurement as per IND as – An Evaluation of Critical Balance Sheet Items

Fair Value can be defined 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 also called as the exit price since it is calculated as the price to sell as asset rather than the price to buy that asset. Fair value is a market-based measurement rather than an entity-specific measurement. It is measured based on the assumptions used by the market participants to price an asset or a liability subject to its risk. The definition of fair value focuses on assets and liabilities because they are the primary subject of accounting measurement. This paper focuses on the implications of Fair Value in the accounting measurement of certain critical line items with reference to IND AS 113. The study evaluates the impact of using Fair value measurement in Financial Instruments, Property, Plant and Equipment and Biological Assets. The observations and findings of the study will help corporate to understand the concept of fair value, its measurement methods and its effect.