Company: FRFXF
Filing Date: 2025-03-14
Form Type: F-4
Source: 0001104659-25-024010
Chunk: 36

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-14
Form: F-4
Chunk 36
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S 17 replaced IFRS 4 Insurance Contracts and
introduced considerable change and additional complexity to the recognition, measurement, presentation and disclosure of insurance
contracts within the Company’s consolidated financial statements. The complex measurement requirements of IFRS 17 increased
the potential volatility in the Company’s consolidated statement of earnings and financial position, which affects financial
reporting risk.

Financial reporting risks relating to deferred taxes associated with amendments to IAS 12.

On May 23, 2023, the
IASB issued amendments to IAS 12 Income Taxes (“IAS 12”) to provide temporary relief from accounting and
disclosure for deferred taxes arising from the implementation of Pillar Two model rules published by the Organisation for Economic
Co-operation and Development (“OECD”). The Pillar Two model rules provide a general framework for the implementation
of a 15% global minimum tax, which is to be applied on a jurisdiction-by-jurisdiction basis. We retrospectively adopted this amendment
during the second quarter of 2023 and have applied the exception to recognizing and disclosing information regarding Pillar Two deferred
income tax assets and liabilities.

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To the extent that the value of our goodwill, indefinite-lived intangible assets or investments in associates is impaired, we are required to write down the value of such assets.

The goodwill, indefinite-lived
intangible assets and investments in associates on our consolidated balance sheet originated from various acquisitions and investments
made by us or our operating subsidiaries. Continued profitability and achievement of financial plans by acquired businesses and associates
is a key consideration for there to be no impairment in the carrying value of goodwill, indefinite-lived intangible assets and investments
in associates. An intangible asset may be impaired if the economic benefit to be derived from its use is unexpectedly diminished. An investment
in an associate is considered to be impaired if its carrying value exceeds its recoverable amount (the higher of the associate’s
fair value and value-in-use).

Management regularly reviews
the current and expected profitability of operating companies and associates and their success in achieving financial plans when assessing
the carrying value of goodwill, indefinite-lived intangible assets and investments in associates. The carrying values of goodwill and
indefinite-lived intangible assets are tested for impairment at least annually or more often if events or circumstances indicate there
may be impairment. Investments in associates with carrying values that exceed their fair values are tested for impairment using value-in-use
discounted cash flow models at each reporting date.