Question 3 - Part a

In this lesson

1. 0:00 Question three requirements overview
2. 2:55 IFRS 13 fair value principles explained
3. 5:26 Identifying principal and advantageous markets
4. 7:57 Transaction costs treatment in fair value
5. 9:11 Calculating fair value for vehicles
6. 11:46 Part B: Valuing non-current assets
7. 13:03 Highest and best use concept
8. 14:19 Legal permissibility and planning requirements
9. 16:52 Transformation costs for alternative uses
10. 19:02 Evaluating multiple possible uses
11. 20:26 Conclusion: Using current value approach

About this lesson

You'll work through identifying the principal market versus the most advantageous market, understand why transaction costs must be excluded from fair value calculations, and apply these rules to calculate the fair value of assets across different markets. The lesson also covers how to value land under the revaluation model when multiple uses are possible, including the importance of legal permissibility, transformation costs, and considering all potential uses when determining fair value. This is essential exam technique for F2 and SBR papers, where fair value measurement questions require both technical knowledge and clear communication of your reasoning to the marker. You'll see how to structure your answer by first explaining the theory, then identifying which market applies to your scenario, and finally performing the calculation with the correct adjustments. The tutor also highlights common mistakes—such as incorrectly deducting transaction costs—and shows you how to handle situations where uncertainty exists about an asset's intended use, demonstrating that sometimes the safest approach is to use current value rather than speculate on future possibilities.

Duration: 22m