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Hope Ltd holds an asset that is traded in three different markets: Adelaide, Brisbane, and Perth. Hope Ltd normally trades in Perth. Some information gathered
Hope Ltd holds an asset that is traded in three different markets: Adelaide, Brisbane, and Perth. Hope Ltd normally trades in Perth. Some information gathered in relation to these three markets is as follows.
Adelaide | Brisbane | Perth | |
Annual volume | 60,000 | 24,000 | 12,000 |
Price per unit | $200 | $192 | $212 |
Transportation cost per unit | $12 | $12 | $16 |
Transaction cost per unit | $4 | $8 | $8 |
Question:
Using the above information, explain how Hope Ltd should measure the fair value of the asset it holds.
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