Determining the most advantageous market [IFRS 13.IE19,21-22]
Consider the same facts as in. If neither market is the principal market for the asset, the fair value of the asset would be measured using the price in the most advantageous market.
The most advantageous market is the market that maximises the amount that would be received to sell the asset, after taking into account transaction costs and transport costs (i.e. the net amount that would be received in the respective markets).
|
Market A |
Market B |
|
|
Price that would be received |
26 |
25 |
|
Transaction costs in that market |
(3) |
(1) |
|
Costs to transport the asset to the market |
(2) |
(2) |
|
Net amount that would be received |
21 |
22 |
Because the entity would maximise the net amount that would be received for the asset in Market B (CU22), that is the most advantageous market. Market B is the most advantageous market even though the fair value that would be recognised in that market (CU23 = CU25 CU2) is lower than in Market A (CU24 = CU26 CU2).