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CMA Final · Corporate Financial Reporting · Valuation of Shares (including Determination of Goodwill)

Kaveri Industries holds equity shares of a listed company that are traded on the National Stock Exchange. Under Ind AS 113, which description of the National Stock Exchange as a source of inputs is correct?

The National Stock Exchange is an exchange market under Ind AS 113. In an exchange market, closing prices are readily available and generally representative of fair value. Bid and ask quotes are typical of dealer markets, not exchanges, so the dealer-market description does not fit.

  1. AIt is an exchange market, where closing prices are readily available and generally representative of fair valueCorrect
  2. BIt is a dealer market, where bid and ask prices are more readily available than closing prices
  3. CIt is a brokered market, where brokers match buyers and sellers without holding inventory
  4. DIt is a principal-to-principal market, where transactions are negotiated with no intermediary

Explanation

Ind AS 113 gives the National Stock Exchange as its example of an exchange market. In such a market closing prices are readily available and generally representative of fair value. Dealer markets rely on bid and ask quotes, so option 2 describes a different market type.

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