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Hello Sir,
Kindly help me understand why exactly have we included notional rent and even after including it we are also considering the owned land cost in valuation…
I’m very confused please shed some light.
IAS 41 has been downgraded in the syllabus, so you shouldn’t be spending too long on this.
Please can you rephrase the question so that I and other students don’t have to read the whole question in order to work out what you are asking.
I assume you are using the current question bank – I can’t see any reference to IAS 41 – it’s now an IFRS 13 question. You need the question bank effective from September 2021.
My question is why add the notional rental charge to cashflows to find value of biological asset.
”In the fair value of maize Yanong includes a notional charge for the rent of the land where it is self owned”
They want to measure at fair value.
Fair value is market value. (IFRS 13) What would the maize normally sell for?
Most market participants have to rent land – so that would be factored in the the price of their goods.
So, as we are trying to work out the regular market value, we pretend that we pay rent in working out the price.
Best I can do on this one. 🙂
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