Question

When Delta elected “Fresh Start Accounting” for 2007, how did Delta establish the fair value of these assets?

Answer 1

Ans :As per IFRS 13 Delta need to establish according to this levels .

First compare same industry listed companies identicial asset if not

compare same industry listed companies similiar asset if not

   compare same industry unlisted companies Identical asset if not

compare same industry unlisted companies similiar asset if not

Delta own estimates like interest yield, PV's of cashflows etc..

Note

Fair value is the estimated price at which an asset can be sold or a liability settled in an orderly transaction to a third party under current market conditions.The  fair value of an asset is usually determined by the market and agreed upon by a willing buyer and seller, and it can fluctuate often.

They are three levels to establish fair value of assets initially for Delta as per IFRS 13 " Fair value measurement "

Level 1 inputs

level 1 input are quoted market prices in active markets for identicial assets .These quoted markets provide most reliable information about fairvalue and we can apply without modification

Level 2 Inputs

level 2 inputs are

1 . Other than quoted market prices i.e..(unquoted market prices)for assets like Interest yield etc..

2 . Quoted market prices in active market for similiar assets or

3 . Quoted market prices for identicial assets which are not active .

Level 3 Inputs

level 3 inputs are unobservable inputs prices for asset based on best information available it may be entity own information based on market participitants at measurement date like PV's of cashflows , Highest and best use , probabilities etc..

I hope you would compare like this initially first level 1 then level 2 and finally level 3 . Level 1 is more relialble than level 2 and level 3 inputs .