Question - Handy Ltd holds an asset that is traded in three different accessible markets, Market A, Market B, and Market C. The valuation premise for the asset is on a stand-alone basis. Handy Ltd normally trades 60% of such assets in Market C and 40% in Market B. Some information gathered in relation to these three markets, based on identical assets, is as follows:
Market A Market B Market C
Annual market volume for the asset 60 000 24 000 12 000
Price 150,000 146,000 156,000
Transport costs 6,000 6,000 8,000
Transaction costs 2,000 4,000 4,000
Required - Using the above information, explain how Handy Ltd should measure the fair value of the asset it holds and determine the asset's fair value (show calculations).
In you answer, outline the key principles that Handy Ltd should consider by making reference to AASB 13. You should include as many points that you think are relevant (i.e. be comprehensive). You do not need to quote paragraphs from the standard verbatim or write blocks of text from the standard, but quote the appropriate paragraph number and summarise in your own words.