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Explain the possible valuation techniques

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Reference no: EM133118144

Question - Flemington Ltd is a company that has a vibrant Research and Development (R&D) unit that develops cutting edge tools in its production processes. Recently, the R&D unit developed a new tool which greatly improves Flemington Ltd's production efficiency. This tool can also be used by other companies in their production processes. Rather than manufacture and sell this tool, the management of Flemington Ltd decided to allow other companies to use this tool under a license. The management of Flemington Ltd decides to fair value the license.

Required - Based on AASB 13 Fair Value Measurement:

(a) Specify the highest and best use of the license and the valuation premise that the management of Flemington Ltd should use to fair value the license.

(b) Explain the possible valuation techniques that the management of Flemington Ltd could use to fair value the license.

Reference no: EM133118144

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