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10.20 XYZ Ltd owns a land based drilling rig. It is in near perfect condition and unmodified. The company wishes to establish a fair value
10.20 XYZ Ltd owns a land based drilling rig. It is in near perfect condition and unmodified. The company wishes to establish a fair value for the rig and identified two markets where almost identical rigs are being actively traded. In Market A, the price that would be received is $27 000, there will be a commission payable to a selling agent of 10%, and it will cost $3000 to transport the rig to that market. In Market B, the price that would be received is S26 000, there are no commissions to pay, and the costs to transport the asset to that market are $3000. What fair value would be placed on the asset based on this information? Show workings and explain. LOS
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