In which circumstance will it be necessary to determine the fair value of an entity's own equity instruments?
A) Where the entity is preparing for listing.
B) Where the entity undertakes a business combination and issues its own equity instruments in exchange for a business.
C) Where the entity undertakes a share buy-back.
D) Where there is a change in the shareholding of the entity.

Question

Quizplus · Accepted Answer

The fair value of an entity's own equity instruments will need to be determined in a business combination where the entity issues its own equity instruments in exchange for a business. In this case, the fair value of the equity instruments is used to measure the cost of the acquisition. The other options, such as preparing for listing, share buy-backs, and changes in shareholding, may not necessarily require the determination of the fair value of the entity's own equity instruments.

In Which Circumstance Will It Be Necessary to Determine the Fair