Conceptual Framework for Financial Reporting

Value in use and fulfilment value
Value in use is the present value of the cash flows, or other economic benefits,
that an entity expects to derive from the use of an asset and from its ultimate
disposal. Fulfilment value is the present value of the cash, or other economic
resources, that an entity expects to be obliged to transfer as it fulfils a
liability. Those amounts of cash or other economic resources include not only
the amounts to be transferred to the liability counterparty, but also the
6.12
6.13
6.14
6.15
6.16
6.17
Conceptual Framework
A64
© IFRS Foundation

---

amounts that the entity expects to be obliged to transfer to other parties to
enable it to fulfil the liability.
Because value in use and fulfilment value are based on future cash flows, they
do not include transaction costs incurred on acquiring an asset or taking on a
liability. However, value in use and fulfilment value include the present value
of any transaction costs an entity expects to incur on the ultimate disposal of
the asset or on fulfilling the liability.
Value in use and fulfilment value reflect entity-specific assumptions rather
than assumptions by market participants. In practice, there may sometimes be
little difference between the assumptions that market participants would use
and those that an entity itself uses.
Value in use and fulfilment value cannot be observed directly and are
determined using cash-flow-based measurement techniques (see paragraphs
6.91–6.95). Value in use and fulfilment value reflect the same factors
described for fair value in paragraph 6.14, but from an entity-specific
perspective rather than from a market-participant perspective.
Current cost
The current cost of an asset is the cost of an equivalent asset at the
measurement date, comprising the consideration that would be paid at the
measurement date plus the transaction costs that would be incurred at that
date. The current cost of a liability is the consideration that would be received
for an equivalent liability at the measurement date minus the transaction
costs that would be incurred at that date. Current cost, like historical cost, is
an entry value: it reflects prices in the market in which the entity would
acquire the asset or would incur the liability. Hence, it is different from fair
value, value in use and fulfilment value, which are exit values. However,
unlike historical cost, current cost reflects conditions at the measurement
date.
In some cases, current cost cannot be determined directly by observing prices
in an active market and must be determined indirectly by other means. For
example, if prices are available only for new assets, the current cost of a used
asset might need to be estimated by adjusting the current price of a new asset
to reflect the current age and condition of the asset held by the entity.