Conceptual Framework for Financial Reporting

Current value
Fair value
Information provided by measuring assets and liabilities at fair value may
have predictive value because fair value reflects market participants’ current
expectations about the amount, timing and uncertainty of future cash flows.
These expectations are priced in a manner that reflects the current risk
preferences of market participants. That information may also have
confirmatory value by providing feedback about previous expectations.
Income and expenses reflecting market participants’ current expectations may
have some predictive value, because such income and expenses can be used as
an input in predicting future income and expenses. Such income and expenses
may also help in an assessment of how efficiently and effectively the entity’s
management has discharged its responsibilities to use the entity’s economic
resources.
A change in the fair value of an asset or liability can result from various
factors identified in paragraph 6.14. When those factors have different
characteristics, identifying separately income and expenses that result from
those factors can provide useful information to users of financial statements
(see paragraph 7.14(b)).
If an entity acquired an asset in one market and determines fair value using
prices in a different market (the market in which the entity would sell the
asset), any difference between the prices in those two markets is recognised as
income when that fair value is first determined.
Sale of an asset or transfer of a liability would normally be for consideration
of an amount similar to its fair value, if the transaction were to occur in the
market that was the source for the prices used when measuring that fair
value. In those cases, if the asset or liability is measured at fair value, the net
income or net expenses arising at the time of the sale or transfer would
usually be small, unless the effect of transaction costs is significant.