How do IFRS 13 and ASC 820 differ in fair value measurement?

Q: How do IFRS 13 and ASC 820 differ in fair value measurement?

IFRS 13 and ASC 820 are substantively converged definitions of fair value: both define it as 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. Both use the same three-level hierarchy (Level 1 observable quoted prices, Level 2 observable inputs, Level 3 unobservable inputs), both require highest-and-best-use for non-financial assets, and both mandate exit-price orientation.\n\nDifferences remain at the edges. IFRS 13 permits portfolio-level measurement for groups of financial assets and liabilities with offsetting market or credit risks, and ASC 820 also allows it but with slightly different documentation. IFRS does not have the same practical expedient as ASC 820 for NAV-based investments. Disclosure requirements about Level 3 transfers, sensitivity analyses, and valuation processes are nearly identical.\n\nFor Marlowe Instruments, if you hold a structured note and classify it Level 2 under IFRS, the measurement under ASC 820 should yield the same value. Differences that do arise typically stem from day-one gain recognition (IFRS defers, US GAAP recognizes if Level 1/2 inputs support it) and unit of account choices.\n\n```mermaid\nflowchart TD\n A[Fair Value] --> B[IFRS 13]\n A --> C[ASC 820]\n B --> D[Exit price]\n C --> D\n D --> E[Level 1/2/3]\n```

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IFRS 13 and ASC 820 are substantively converged: both use exit price, three-level hierarchy, and highest-and-best-use. Differences exist in portfolio measurement, NAV expedient, and day-one gain treatment.

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Differences remain at the edges. IFRS 13 permits portfolio-level measurement for groups of financial assets and liabilities with offsetting market or credit risks, and ASC 820 also allows it but with slightly different documentation. IFRS does not have the same practical expedient as ASC 820 for NAV-based investments. Disclosure requirements about Level 3 transfers, sensitivity analyses, and valuation processes are nearly identical.

For Marlowe Instruments, if you hold a structured note and classify it Level 2 under IFRS, the measurement under ASC 820 should yield the same value. Differences that do arise typically stem from day-one gain recognition (IFRS defers, US GAAP recognizes if Level 1/2 inputs support it) and unit of account choices.

```mermaid
flowchart TD
    A[Fair Value] --> B[IFRS 13]
    A --> C[ASC 820]
    B --> D[Exit price]
    C --> D
    D --> E[Level 1/2/3]
```

How do IFRS 13 and ASC 820 differ in fair value measurement?

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