Explains the treatment of transaction and transport costs

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At 30 June 2020 similar items of plant to were sold in two markets, Brisbane and Perth.

The selling price in the Brisbane market is $70,000 and the selling price in the Perth market is $75,000. Transaction costs are $2,000 in the Brisbane market and $3,500 in the Perth market.

Make Ltd considers location is an important characteristic for Plant - Item A. The transport costs are $750 for the Brisbane market and $1,400 for the Perth market.

There is no principal market for Plant - Item A.

Required:

Problem (a) Referring to AASB 13: Fair Value Measurement, determine the most advantageous market and calculate the fair value of Plant - Item A at 30 June 2020. Show all workings.

Problem (b) Provide one (1) reason that explains the treatment of transaction and transport costs in your calculation of the fair value for Plant - Item A at 30 June 2020.

Reference no: EM132975394

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