AC2101 S1 2014 Seminar 2.pptx

What is the fair value in this case hint price is

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Unformatted text preview: count a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use, taking into account the use of the asset that is: §༊  Physically possible §༊  Legally permissible §༊  Financially feasible §༊  Highest and best use is determined from the perspective of market participants, even if the entity intends a different use. §༊  However, an entities current use is presumed to be its highest and best use. 10 5 FRS 113 – Fair Value Measurement §༊  Principal Market versus Most Advantageous Market §༊  Principal Market has the greatest volume and activity level §༊  (Adapted from FRS 113 Illustrative Example 6) Assume firm owns an asset that can be traded in the following markets: Market A B Number of Trades 30 12 Price 26 25 Transport Cost 2 2 Possible Fair Value 24 23 Transaction Cost 3 1 Net Proceeds 21 22 §༊  Which is the Principal Market? §༊  What is the fair value in this case? Hint: price is adjusted for transportation costs but not transaction costs (FRS 113 para 25) 11 FRS 113 – Fair Value Measurement §༊  Principal Market versus Most Advantageous Market §༊  Most advantageous market maximizes amount received/paid net of transaction & transport costs. §༊  (Adapted from FRS 113 Illustrative Example 6) Assume firm owns an asset that can be traded in the following markets: Market A B Number...
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This document was uploaded on 02/10/2014.

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