Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IFRS 13
- This topic has 1 reply, 2 voices, and was last updated 3 years ago by Stephen Widberg.
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- March 27, 2021 at 9:20 am #615304
sir we are supposed to use IFRS13 to answer this question.
“In addition, Mehran has acquired the brand name associated with the produce from the farm. Mehran has decided to discontinue the brand on the assumption that it is similar to its existing brands. Mehran has determined that if it ceases to use the brand, then the indirect benefits will be $20 million. If it continues to use the brand, then the direct benefit will be $17 million. Other companies in this market do not have brands that are as strong as Mehran’s and so would not see any significant benefit from the discontinuation.”
now sir the highest and best use fo a non-financial asset is the use that market participants would alopt to maximise($20m, though discontinuation) its value . So if a market participant were to acquire Mehran it would discontinue the brand to maximise its value to the firm.
But the answer at the back is FV should be 17$m because other companies who don’t have strong brands would use it instead of disposing it.
March 28, 2021 at 11:56 am #615361A very confusing question – not your fault!
In my simple mind the brand has a FV of 17.
Why continue to use 17, stop using 0. Greater is 17.
I cannot imagine valuing something at ‘indirect benefits’, so that’s my final word on this one.
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