- 12 Marks
FR – L2 – Q54 – Fair Value Measurement
Calculate fair value of 150 vehicles based on market data and IFRS 13 principles.
Question
Zest Plc is a conglomerate with interests in a wide range of businesses including construction services, property management, and farming. Zest Plc owns a division which sells construction vehicles. At 31 December 20X6, Zest Plc holds an inventory of 150 new and identical vehicles. There are three markets in which the vehicles can be sold. Information about the sale price and costs in GH¢ of selling in each market are as follows.
| Market | Sales price per vehicle (GH¢) | Transaction costs per vehicle (GH¢) | Transport cost to the market per vehicle (GH¢) |
|---|---|---|---|
| A | 40,000 | 200 | 400 |
| B | 39,800 | 400 | 100 |
| C | 40,000 | 350 | 350 |
Required:
(a) Explain and calculate the fair value of the 150 vehicles at 31 December 20X6?
(b) Explain the impact of this new information on the fair value of the 150 vehicles at 31 December 20X6 (if any) and recalculate the fair value if needed
(c) Explain and estimate the fair value of the park land? (6 marks)
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