engleski

Value of capital in fair value measurement

Although fair value is not a new evaluation and measurement system, it is encouraged by new and revised international accounting standards. Fair value philosophy is to provide financial information about the reporting entity that is useful to present and potential investors and creditors in making decisions in their capacity as capital providers. The objective should pertain to financial reporting as whole, not just financial statements. This article provides information about fair value measurement of asset, liabilities, and especially equity segments and equity instruments according to IAS 32, IFRS 9 and IFRS 13. Based on accounting standards all of entities asset and liabilities must be evaluated and measured at their fair value, but if we do so, what is happening with equity? Equity is made out of elements that can be presented also as liabilities if recognized based on strict application of substance over form doctrine, or as compound financial instruments that include equity and liability segment. Consequently, these instruments will be recognized part as liability and part as equity, but also measured at different methods. This paper deals with problem how can we protect value of equity for its owners and display fair value of equity in entities financial reports.

IFRS; IAS; fair value; value of equity; equity in fair value measurement; compound instruments

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