A Practical Guide to Fair Value Assessment
Fair value is no longer a footnote — it drives the numbers that appear on the face of the balance sheet. Investment property, financial instruments, share-based payments, business combinations, impairment testing, and biological assets all now carry fair value measurements that statutory auditors will test line by line. At PNPC Global, our valuation team has produced fair value assessments under Ind AS 113 and IFRS 13 for listed companies, PE-backed businesses, and multinational groups across India and the UAE since 1986.
What You're Really Buying
Fair value, as defined under Ind AS 113 (Fair Value Measurement) and its international counterpart IFRS 13, is 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. ' This distinction is where many first-time preparers go wrong, and it is the first thing a statutory auditor tests when reviewing a fair value note.
Ind AS 113 (and IFRS 13) do not create new fair value requirements themselves — they are measurement and disclosure standards that apply wherever another standard requires or permits fair value.
For the full scope, current process and what PNPC includes, see the dedicated Fair Value Assessment service page.
When You'd Need This
- Investment property carried under the cost model still requires fair value disclosure in the notes under Ind AS 40 — even if not recognised on the face of the balance sheet
- Financial instruments classified as Fair Value Through Profit or Loss (FVTPL) or Fair Value Through Other Comprehensive Income (FVOCI) under Ind AS 109 require fair value measurement at every reporting date
- Business combinations under Ind AS 103 require Purchase Price Allocation — fair valuing acquired identifiable assets, liabilities, and contingent consideration, with residual goodwill calculated only after that allocation
- Impairment testing of goodwill and cash-generating units under Ind AS 36 where the recoverable amount is determined using fair value less costs of disposal rather than value in use
Before You Assume You Need This
- Pricing a share issue to a resident or non-resident investor for FEMA/FDI compliance — that requires a Rule 11UA (Income-tax Rules) or FEMA pricing guideline valuation, not an Ind AS 113 fair value opinion, though the underlying DCF or NAV methodology may overlap
- Determining the exchange ratio for a merger or demerger scheme under Sections 230–232 of the Companies Act — this requires a registered valuer's report under the Companies (Registered Valuers and Valuation) Rules, 2017, a distinct regulatory process
- Valuing a business purely for internal strategic decision-making or a term-sheet negotiation with no financial reporting trigger — a feasibility study or an informal valuation opinion may serve better and cost less than a full Ind AS 113 compliant report
Quick Answers
What exactly is a Fair Value Assessment under Ind AS 113?
It is an independent determination of the exit price of an asset or liability — the price that would be received to sell the asset, or paid to transfer the liability, in an orderly transaction between market participants at the measurement date. Ind AS 113 is a measurement and disclosure standard: it does not itself decide which items must be fair valued (that is determined by other standards like Ind AS 109, Ind AS 40, or Ind AS 103), but once fair value is required, Ind AS 113 governs exactly how it must be measured, classified in the hierarchy, and disclosed.
How is Ind AS 113 different from IFRS 13?
Ind AS 113 is the Indian Accounting Standard, converged with IFRS 13 (Fair Value Measurement) as issued by the IASB. The core principles, the three-level fair value hierarchy, and the disclosure requirements are substantially aligned. Minor carve-outs and transitional provisions exist in the Ind AS version, as with most Ind AS standards converged from IFRS. g. for an overseas parent or listing), IFRS 13 governs those accounts — the valuation work itself is usually identical, but the disclosure format differs slightly.
Which items on our balance sheet actually need a fair value assessment?
It depends entirely on which other Ind AS standards apply to your specific balance sheet items. Common triggers: investment property (Ind AS 40) requires fair value disclosure even under the cost model; financial assets/liabilities classified as FVTPL or FVOCI (Ind AS 109) require fair value at every reporting date; acquired assets and liabilities in a business combination (Ind AS 103); goodwill and CGU impairment testing where fair value less costs of disposal is used (Ind AS 36); share-based payments (Ind AS 102); biological assets (Ind AS 41); and investment in subsidiaries/associates held at fair value under certain consolidation exemptions.
Getting This Right From the Start
Talk to PNPC's valuation team before your next audit cycle — a fair value report built to be defended, not just delivered.
PNPC Global has advised Chennai, Bangalore and Hyderabad businesses since 1986. Explore the full Corporate Finance practice for related services, or go straight to the Fair Value Assessment page for specifics.
This is a general explainer, not a substitute for checking today's rules with PNPC or the relevant authority — figures and deadlines move, so none are quoted here as fixed.