Note · 2026-10-08

Is market value the same as fair value under IFRS 13?

In most cases, yes. The Red Book says that for most practical purposes market value and fair value under IFRS 13 should produce the same result, and Ukraine’s National Valuation Standard No. 1 (NVS 1) equates fair value with market value for accounting purposes where market value can be determined. The difference worth planning for lies in disclosure. IFRS 13 requires the entity to state the level of the fair value hierarchy, to describe the techniques and inputs for Levels 2 and 3, and for Level 3 to give quantitative information about significant unobservable inputs. NVS 1 requires the report to describe the methods and input data, but not the hierarchy level or the split between observable and unobservable inputs, so it is worth agreeing these in the scope of work and the valuation contract.

Source: RICS Red Book 2025, VPS 2, para. 7.2; VPGA 1, para. 4.6; NVS 1, paras 33 and 56; IFRS 13, para. 93.

Two definitions

IFRS 13 defines fair value 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, that is, an exit price. Under IVS, market value is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The NVS 1 definition of market value is close in substance.

Source: IFRS 13, paras 9 and 24; IVS Glossary, para. 10.18; NVS 1, para. 3.

For non-financial assets, both bases rest on highest and best use. Under IFRS 13, it is determined from the perspective of market participants, even if the entity intends a different use, and the current use is presumed to be the highest and best use unless market or other factors suggest otherwise. The criteria are the same in substance: a use that is physically possible, legally permissible and financially feasible.

Source: IFRS 13, paras 27⁠–⁠29; IVS 102, Appendix, paras A10.04 and A90.03; NVS 1, paras 10 and 13.

Both bases treat transaction costs the same way: the price is not adjusted for them. Transport costs are not transaction costs: where location is a characteristic of the asset, the price is adjusted for the cost of transporting the asset to the market.

Source: IFRS 13, paras 25⁠–⁠26; IVS 102, para. 70.01; RICS Red Book 2025, VPS 2, para. 8.1.

Where, in my view, they can differ

• Unit of account. Whether the measurement is of a stand-alone asset or a group of assets is determined by the IFRS that requires or permits the fair value measurement, except as IFRS 13 itself provides; the valuer agrees it with the client. Highest and best use determines whether the asset is valued on a stand-alone basis or in combination with other assets (for example, equipment valued as installed).
• Specialised property. NVS 1 equates the fair value of specialised property, special-purpose property or property of special construction with depreciated replacement (reproduction) cost. IFRS 13 has no such rule: the technique is chosen to suit the circumstances, maximising the use of relevant observable inputs. Under the cost approach, the price that would be received for the asset is based on the cost to a market participant buyer to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence (physical deterioration and functional and economic obsolescence); obsolescence in this sense is broader than depreciation for financial reporting purposes. NVS 1 also deducts economic (external) obsolescence, so a difference arises in particular where the calculation leaves it out.
• Asking prices. Where reliable sale prices are not available, NVS 1 allows market value to be based on asking prices adjusted for the relationship between sale and asking prices. IFRS 13 does not mention asking prices. The difference here is in the level rather than the figure: such an adjustment usually rests on unobservable inputs, and if it significantly changes the result, the measurement is categorised within Level 3.

Source: IFRS 13, paras 14, 31, 61, 75 and B8–B9; RICS Red Book 2025, VPGA 1, paras 3.1 and 4.7; NVS 1, paras 3, 16, 33 and 40.

What IFRS 13 asks for beyond the figure

For each class of assets measured at fair value, the entity discloses, among other things:

• the level of the fair value hierarchy (1, 2 or 3);
• for Levels 2 and 3, a description of the valuation techniques and inputs, and any change in technique with the reason for it;
• for Level 3, quantitative information about significant unobservable inputs;
• for recurring Level 3 measurements, a narrative description of sensitivity to changes in unobservable inputs where a different amount might result in a significantly higher or lower fair value, including interrelationships between those inputs;
• where the highest and best use of a non-financial asset differs from its current use, that fact and the reason.

Source: IFRS 13, para. 93(b), (d), (h)(i) and (i).

Where fair value is only disclosed and the asset is not measured at fair value in the statement of financial position, only some of these requirements apply, and quantitative Level 3 information is not required.

Source: IFRS 13, para. 97.

The entity makes these disclosures, but much of the information sits with the valuer: under EVS, the valuer is closest to the measurement and probably best placed to categorise the inputs. The entity decides the level for the measurement as a whole, while the valuer gives enough detail about the methods and inputs and must state which of them are significant. For real estate, Level 3 is the most common: under the Red Book, most entities report it that way, and under EVS it is in many cases the most likely conclusion for the main inputs in valuing investment property. This level does not mean a lower-quality valuation.

Source: EVS 2025, EVGN 5, paras 5.5, 5.12, 6.2 and 6.3; RICS Red Book 2025, VPGA 1, para. 4.12.

A full-form NVS 1 report already includes conclusions on both existing use and highest and best use. NVS 1 does not require the hierarchy level, the split between observable and unobservable inputs or a description of sensitivity.

Source: NVS 1, para. 56.

What to agree before work starts

Under EVS, the valuer must discuss reporting requirements in detail with the client at the earliest opportunity. The Red Book lists what may need to be agreed in the scope of work for a valuation used in financial reporting, and says the report should include, where applicable, the information the entity must disclose, including sensitivity. In practice, the scope of work and the valuation contract should record:

• which IFRS and class of assets the valuation is for;
• the unit of account, and whether the asset is valued on a stand-alone basis or in combination with others;
• the conclusion on highest and best use, and whether it differs from current use (under EVS, where the valuer has not valued on the basis of highest and best use, this must be stated with the reasons);
• whether the value includes or excludes VAT;
• a separate IFRS 13 section: significant inputs marked as observable or unobservable, and sensitivity to the key unobservable inputs.

Source: EVS 2025, EVGN 5, paras 4.2.2 and 6.1; RICS Red Book 2025, VPGA 1, paras 3.1 and 3.3; NVS 1, para. 17.

For how the auditor then evaluates such work, see the note “What does an auditor expect from a review of a valuation report?”