Company Accounting

Running head: COMPANY ACCOUNTING
Company Accounting
Name of the Student:
Name of the University:
Author’s Note:

COMPANY ACCOUNTING1
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................3
Question 3........................................................................................................................................4
References........................................................................................................................................6

COMPANY ACCOUNTING2
Question 1
a) In accordance with the IFRS 13 it is necessary and required that an entity considers
various assumptions from the view point of a market participant that would be
considering various factors and acting in the best economic interest for determining the
fair value of the asset or liability (IFRS 13, 2019). However, on the other hand if the
market participants in relation to the specified asset or liability is not available then some
key characteristics that an entity should consider for the purpose of assessing the fair
value of the asset are as follows:
 Location and Condition of Asset
 Is there any restrictions on the sale or usage of Asset.
The key logic behind the market participant in the context of AASB13/IFRS 13 is to
assume and put an fair value assessor in the position of a market participant who in turn would
actually be using varied sources of information and factors for the purpose of determining its true
value (IFRS, 2019).
b) A market participant would be making assumptions in the context of fair value
assessment of asset in accordance with the factors that can potentially affect the cash
flows or benefits that are attributable to an entity. On the other hand, assumptions
containing the Location, Condition, Age and Projected Cash Inflows/Outflows from the
Asset/Liability would be considered. It is also important to check whether the transfer of
ownership title is easily transferable or not for assessment of fair value. Highest and best
usage of an asset can also be checked with the physical structure, legal factors and
financial viability of the defined asset/liability. In order to consistently value the fair