Question
Zoom owns 50 non-financial assets. It has the ability to purchase those assets from four markets (with same specification) and wishes to measure their fair
Zoom owns 50 non-financial assets. It has the ability to purchase those assets from four markets (with same specification) and wishes to measure their fair values for the purpose of the revaluation policy. Four markets currently exist for this type of non-financial asset; Zoom has transacted regularly in three of them. At measurement date, the volume, prices and various costs of each non-financial asset in each respective market are as follows:
| Market | Sale price | Past volume with Zoom | Total market volume | Transaction costs | Transport costs |
| East | $46,000 | 1,200 | 180,000 | $500 | $400 |
| South | $46,000 | 1,500 | 150,000 | $400 | $700 |
| West | $45,000 | 0 | 200,000 | $300 | $600 |
| North | $45,000 | 1,700 | 120,000 | $200 | $500 |
Based on the above information, which market is the most advantageous market (if principle market is restricted) and what is the fair value of all 50 non-financial assets under the most advantageous market as at the measurement date assuming that the current use of this type of non-financial asset is its the highest and best use?
| A. | Market West; $2.285 million | |
| B. | Market West; $2.285 million | |
| C. | Market East; $2.275 million | |
| D. | Market East; $2.28 million |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting
Authors: Robert Libby
6th Edition
0077405641, 978-0077405649
