Question

Pls do not handwritten for easy reading
=== ===
Question:-
Delclean Pte Ltd, a company incorporated in Singapore and which adopts Singapore Financial Report Standards, sells a special cleaning solution in three different cities in Malaysia. There is no information on the market volume in each of the three markets.
The current year's prices in the different markets are as follows:-
Johor | Malacca| Kuala Lumpur|
Price Per unit(at period end ($) 45 | 42 | 38
Transport cost per unit ($) 2 | 3 | 4
Transaction costs per unit ($) 1 | 2 | 2

Required:
Using an appropriate financial reporting standard, explain and determine the fair value of the cleaning solution (unit price) DelClean Pte Ltd use in its financial statements for the current period

Answer 1

According to IFRS and GAAP,

Fair Value is measured assuming a transaction in principal market(market with highest volumes and level of activity) for the asset. In case of Delclean, there is no principal market, Therefore it is assumed that the transaction would occur in the more advantageous market i.e market that would maximise the amount that would be received to sell an asset (special cleaning solution in the case), taking into account transaction and transportation cost.

FAIR VALUE of Cleaning Solution,

JOHOR: $45+$2+$1 = $48

MALACCA: $42+$3+$2 = $47

KUALA LUMPUR: $38+$4+$2 = $44