Answered step by step
Verified Expert Solution
Question
1 Approved Answer
AHP Ltd owns a building and uses it to provide affordable housing for welfare recipients in the local area. As AHP Ltd recently changed its
AHP Ltd owns a building and uses it to provide affordable housing for welfare recipients in the local area. As AHP Ltd recently changed its accounting policy to use the revaluation model for its building class of assets, an independent valuation was undertaken. The revaluation revealed the following information in relation to use of the building at 30 June 2021: Option Estimated future net cash flows from use at 30/06/2021 $1,000,000 1. Continue to be used for affordable housing 2. Sell it in its current form to another party for private residential purposes $2,000,000 The board of directors has no intention to change the current use of the building, as it wishes to maintain the company's current reputation for social responsibility. AHP Ltd's accountant, Marc, therefore believes that the fair value should be measured at $1,000,000 because that represents the highest and best value of the building within the limitations of the company's current objectives. Furthermore, Marc feels that option 2 will never be pursued, as the company has no intention to sell the building. Required: Explain whether you agree with Marc's suggestion, in according with the requirements of AASB13: Fair Value Measurement
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started