Exercise 3.1 VALUATION PREMISE FO MEASUREMENT OF FAIR VA Exercises Exercise 3.1 VALUATION PREMISE FOR MEASUREMENT OF **MODERATE *** DIFFICULT Snapper Ltd conducts a business that makes women's shoes. It operates a factory in an inner suburb of Perth, Australia. The factory contains a large amount of equipment that is used in the manufacture of shoes. Snapper Itd owns both the factory and the land on which the factory stands. The land was acquired in 2005 for $200 000 and the factory was built in that year at a cost of $520 000. Both assets are recorded at cost, with the factory having a carrying amount at 30 June 2014 of 5260 000 In recent years there has been a property boom in Perth with residential house prices doubling such that the average price of a house is approximately $500000. A recent valuation of the land on which the fac- tory stands as performed by a property valuation group and based on recent sales of land in the area has the land at a value of $1000 000. The land is now considered prime residential property given its closeness to the city and, with its superb river views, its suitability for building executive apartments. It would cost $100 000 to demolish the factory to make way for these apartments to be built. It is estimated that to build a new factory on the current site would cost around $780000 The directors of Snapper Ltd want to measure both the factory and the land at fair value as at 30 June 2014. Required Discuss how you would measure these fait values