We support the IASB’s efforts to replace the existing guidance on fair value measurement in IFRS accounting literature with a single standard and strive for closer convergence with fair value measurement requirements in US-GAAP.

However, we raise a number of concerns and recommendations:

• We believe this exit price notion is the most conceptually sound approach for fair value measurement. However, we also believe that fair value is not an appropriate measurement attribute for some types of liabilities, as discussed in our comment letter on the IASB’s Discussion Paper DP/2009/2 Credit Risk in Liability Measurement
• Some proposals within the ED do not move the draft IFRS towards convergence and, we believe, have not been demonstrated to be conceptually superior to ASC 820
• We have concerns regarding why, from a conceptual viewpoint, the entity should be presumed to normally transact in the most advantageous market rather than the principal market
• We have conceptual and practical concerns about the way in which “knowledgeable” is described in the proposed definition of a market participant
• We also have concerns about the ED’s proposed amendments to IAS 39 for the deferral of day one gains and losses in instances where the initial transaction price does not equal fair value for a transaction in which unobservable inputs are utilised in a valuation model.
• We encourage the IASB to reconsider its guidance in IAS 39 for initially recognising transactions at fair value that are not subsequently measured at fair value.
• We recommend the Board consider incorporating concepts from Part I of the IASB Expert Advisory Panel paper “Measuring and disclosing the fair value of financial instruments in markets that are no longer active” issued in October 2008 as application guidance within the draft IFRS.