Conceptual Framework for Financial Reporting

Value in use and fulfilment value
Value in use provides information about the present value of the estimated
cash flows from the use of an asset and from its ultimate disposal. This
information may have predictive value because it can be used in assessing the
prospects for future net cash inflows.
6.31
6.32
6.33
6.34
6.35
6.36
6.37
Conceptual Framework
© IFRS Foundation
A67

---

Fulfilment value provides information about the present value of the
estimated cash flows needed to fulfil a liability. Hence, fulfilment value may
have predictive value, particularly if the liability will be fulfilled, rather than
transferred or settled by negotiation.
Updated estimates of value in use or fulfilment value, combined with
information about estimates of the amount, timing and uncertainty of future
cash flows, may also have confirmatory value because they provide feedback
about previous estimates of value in use or fulfilment value.
Current cost
Information about assets and liabilities measured at current cost may be
relevant because current cost reflects the cost at which an equivalent asset
could be acquired or created at the measurement date or the consideration
that would be received for incurring or taking on an equivalent liability.
Like historical cost, current cost provides information about the cost of an
asset consumed or about income from the fulfilment of liabilities. That
information can be used to derive current margins and can be used as an
input in predicting future margins. Unlike historical cost, current cost reflects
prices prevailing at the time of consumption or fulfilment. When price
changes are significant, margins based on current cost may be more useful for
predicting future margins than margins based on historical cost.
To report the current cost of consumption (or current income from
fulfilment), it is necessary to split the change in the carrying amount in the
reporting period into the current cost of consumption (or current income
from fulfilment), and the effect of changes in prices. The effect of a change in
prices is sometimes referred to as a ‘holding gain’ or a ‘holding loss’.
6.38
6.39
6.40
6.41
6.42
Conceptual Framework
A68
© IFRS Foundation

---