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Africant uses the revaluation model for its non-current assets. Africant has several plots of farmland which are unproductive. The company feels that the land would have more value if it were used for residential purposes. There are several potential purchasers for the land but planning permission has not yet been granted for use of the land for residential purposes. However, preliminary enquiries with the regulatory authorities seem to indicate that planning permission may be granted. Additionally, the government has recently indicated that more agricultural land should be used for residential purposes.

Africant has also been approached to sell the land for commercial development at a higher price than that for residential purposes and understands that fair value measurement of a non-financial asset takes into account a market perspective.

Africant would like an explanation of what is meant by a ‘market perspective’ and advice on how to measure the fair value of the land in its financial statements. (7 marks)

Requirements:

Africant would like an explanation of what is meant by a ‘market perspective’ and advice on how to measure the fair value of the land in its financial statements. (7 marks)

Marks: 7

Answers submitted

Created by Ref Marking Action
Kawsar Ahmed's picture
Kawsar Ahmed
04/12/2021 - 05:11

10279
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