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

Sundaram Industries holds a non-financial asset whose highest and best use is in combination with complementary assets and associated liabilities as a business. Under Ind AS 113, how is the fair value of this asset measured?

Fair value is the price received in a current sale assuming the asset is used together with its complementary assets and associated liabilities, which are available to market participants. The stand-alone basis applies only when stand-alone use is the highest and best use.

  1. AAs the price received in a current transaction to sell the asset, assuming it is used with its complementary assets and associated liabilities available to market participantsCorrect
  2. BAs the price received if the asset is sold on a stand-alone basis to a buyer who will use it alone
  3. CAs the value in use computed from the entity's own cash flow forecasts
  4. DAs the asset's net realisable value after deducting the estimated costs of sale

Explanation

Para 31(a)(i) states that where the highest and best use is in combination with other assets or liabilities, fair value is the price in a current sale assuming use with those complementary assets and liabilities. The stand-alone price applies only under para 31(b). Value in use and net realisable value are not fair value (para 6(c)).

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