Measurement

FlightmoTravel Centre (the company) is a specialist retailer of travel into Europe, with shares listed on a securities exchange. As part of their operations, they own and operate a fleet of Airport transfer vehicles (limousines, buses and luxury SUV's). Due to the Covid-19 crisis, international travel has completely ceased, and theFlightmoTravelCentresfleet of vehicles are no longer being used. The company is not sure when travel restrictions will be lifted, and the board is considering various options available to raise cash to withstand the downturn in operations. One of the options being considered is to dispose of the fleet of vehicles.

The fleet of Airport transfer vehicles originally cost $2.0m, and has a book value (carrying amount) of $800,000. The market for second hand vehicles is very liquid, and the company expects it would be able to sell the fleet for $400,000.If the travel market were to return to normal, the company expects to receive $2.5 million (discounted to present value) in cash inflows from using thefleet over the remaining useful life. The equipment was originally financed byfinance leases attached to each specific vehicle.

Required:

a) Using the options provided in the case, explain which specific measure is most useful from the perspective of each of the following stakeholders. You need to consider the decision usefulness of accounting information produced when using the above figures as a measure of the equipment's value. Justify your answer by explaining in detail why the measure chosen is the most suitable as a decision-making aide for the stakeholder group being discussed, based on their specific needs and the type of decisions they make.

i.Shareholders(6 marks)

ii. Finance LeaseCompany(6 marks)

iii. Board ofDirectors(6 marks)