- This topic has 1 reply, 2 voices, and was last updated 1 year ago by
.
- Posts
Hello,
Principal market is the market with greatest volume and level of activity accessible by the entity.
I am doing now question Mehran Mar/Jun’16 b). In the scenario it is mentioned that Mehran needs licence from the government to export its produce. Doesnt this mean that Merhan doesnt have access to the export market so the prices there should not be considered?
How is the market that can be accessed by the entity defined?principal market – the market with the greatest volume and level of activity for
the asset or liability.In the absence of evidence to the contrary, the market in which the entity would normally enter into a transaction to sell the asset or to transfer the liability is presumed to be the principal market or, in the absence of a principal market, the most advantageous market. (PWC)
So my gut feeling is to decide whether the company NORMALLY TRADES in the market (whether or not they need a licence). If they don’t trade there at the moment, it doesn’t sound like the principal market.
In this type of question there isn’t necessarily a ‘right’ answer. They just want to see whether you understand the principles.
- You must be logged in to reply to this topic.