Fair Value Accounting You are the Accountant for a construction company that is preparing their 30 June 2020 year end accounts. On 1 July 2019 the company acquired a private jet for $200M, to assist the travel requirements of its executives. However due to Covid-19, the market for private jets has deteriorated. Youre concerned how to value the jet for 30 June 2020. Research into the private jet market has indicated the following; - There have been minimal private jet sales since 1 January 2020. - The bid-offer spread between market participants is considered large at present. - You have obtained multiple independent valuations for the private jet, and have found that they vary considerably. - Because of the customisation of the private jet market, there is little to no publicly available information. Other information regarding the private jet is as follows; - When the jet is not being used by the executives, it is hired out publically. Revenue associated with this was $8M for FY 2020. - The market demand for hiring of the jet is expected to increase 5% per year. - The applicable market discount rate is the government bond rate, which is 2% per year. - The repair costs for the jet are estimated at $2M year. Required:

a. With reference to AASB 13/ IFRS 13, Fair Value, identify and describe whether an active or an inactive market exists for the private jet. (5 marks) b. Applying AASB 13/ IFRS 13, Fair Value, explain the two (2) broad categories of inputs used to measure assets and liabilities at fair value. Provide examples using the background information in your response. (5 marks)