In measuring an equity instrument at fair value the objective is to estimate an exit price at measurement date from the perspective of:
A) the entity issuing the equity instrument.
B) the party planning to repurchase the instrument.
C) the party to whom the instrument will be transferred.
D) a market participant who holds the instrument as an asset.

Question

Quizplus · Accepted Answer

The objective of measuring an equity instrument at fair value is to estimate an exit price from the perspective of a market participant who holds the instrument as an asset. This means that the fair value should reflect the price that would be received if the instrument were sold on the open market, rather than the perspective of the entity issuing the instrument or a specific party involved in the transaction.

In Measuring an Equity Instrument at Fair Value the Objective