Question 2 Origin Pte Ltd sells household appliances and owns a division that sells rice cookers. The company was approached by a potential buyer to buy over the division and wished to measure the fair value of the inventory for rice cookers for the purpose of the sale. The company has in its stock 900 rice cookers which are identical. Three markets currently exist for the rice cookers which Origin has transacted regularly. The current volume and prices in the three markets for the rice cookers are as follows: Sales price per cooker Market Transaction costs per cooker ($) Transport cost to the market per cooker Historical volume - cooker sold by Origin (unit) 6,000 2,500 1,500 ($) 40 Malaysia Indonesia Thailand 38 54 4 3 6 34 Required: (a) Determine the fair value of the rice cookers under FRS 113 Fair Value Measurement. Explain how you arrive at that valuation and the factors taken into consideration. (20 marks) (b) The potential buyer managed to obtain the market information and requested the company to reconsider the fair value of the inventory. Total volume of rice cookers (identical model) sold in the three markets were: Market Malaysia Indonesia Thailand Total volume of cookers sold in the market (unit) 150,000 750,000 100,000 (10 marks) Question 2 Origin Pte Ltd sells household appliances and owns a division that sells rice cookers. The company was approached by a potential buyer to buy over the division and wished to measure the fair value of the inventory for rice cookers for the purpose of the sale. The company has in its stock 900 rice cookers which are identical. Three markets currently exist for the rice cookers which Origin has transacted regularly. The current volume and prices in the three markets for the rice cookers are as follows: Sales price per cooker Market Transaction costs per cooker ($) Transport cost to the market per cooker Historical volume - cooker sold by Origin (unit) 6,000 2,500 1,500 ($) 40 Malaysia Indonesia Thailand 38 54 4 3 6 34 Required: (a) Determine the fair value of the rice cookers under FRS 113 Fair Value Measurement. Explain how you arrive at that valuation and the factors taken into consideration. (20 marks) (b) The potential buyer managed to obtain the market information and requested the company to reconsider the fair value of the inventory. Total volume of rice cookers (identical model) sold in the three markets were: Market Malaysia Indonesia Thailand Total volume of cookers sold in the market (unit) 150,000 750,000 100,000 (10 marks)
