5.4 Fair Value Measurement

IFRS Accounting Standards and U.S. GAAP are largely converged, though not identical, in their requirements for measuring fair value and disclosing information about fair value measurements. For example, there are differences in their requirements for when an entity is required or permitted to measure items at fair value. The table below summarizes the key differences between IFRS Accounting Standards and U.S. GAAP regarding fair value measurement.

Topic	IFRS Accounting Standards (IFRS 13)	U.S. GAAP (ASC 820-10)
Inception gains and losses	An entity cannot recognize inception gains or losses for a financial instrument unless the instrument’s fair value is demonstrated by a quoted price in an active market for an identical asset or liability or based on a valuation technique in which an entity uses only observable market data.	If an asset or a liability is measured initially at fair value, any difference between the transaction price and fair value is recognized immediately as a gain or loss in earnings unless otherwise specified.
NAV practical expedient	The NAV practical expedient for investments in investment companies is not provided.	An entity with an investment in an investment company may elect to use, as a measure of fair value in specific circumstances, the reported NAV without adjustment.
Financial liabilities with demand features	The fair value measurement of a financial liability with a demand feature (e.g., a demand deposit) cannot be less than the present value of the amount payable on demand.	The fair value measurement of a deposit liability is described as the amount payable on demand as of the reporting date.
Fair value of equity securities	In the determination of an equity security’s fair value, a contractual restriction on the sale of the equity security is not excluded from the measurement if (1) the restriction is a characteristic of the asset and (2) market participants would take the effect of the restriction into account when pricing the asset.	In the determination of an equity security’s fair value, a contractual restriction on the sale of the equity security must be excluded from the measurement.