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

Meera Steel Ltd owns a plot of land. Its highest and best use is as part of an integrated plant, used together with installed machinery that market participants could obtain. The plant is funded partly by working capital loans and partly by a term loan that financed an unrelated hotel property of Meera Steel. In measuring the fair value of the land, which statement follows from Ind AS 113?

Fair value assumes the land is used with its complementary assets and associated liabilities. Liabilities funding working capital are included, but liabilities funding assets outside the group, such as the hotel-financing term loan, are excluded. The stand-alone basis does not apply because the highest and best use is in combination.

1. AFair value is the price for selling the land on a stand-alone basis, ignoring the plant
2. BFair value assumes use with the complementary assets and associated liabilities, including liabilities funding working capital but not the hotel-financing term loanCorrect
3. CFair value assumes use with the complementary assets and all liabilities of the entity, including the hotel-financing term loan
4. DFair value is based on the plant assets only, and the working capital liabilities are excluded