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(i) In accordance to IFRS13, there are two principles to determined the fair value in the several or different market and there are Principal Market and Most Advantageous Market.

Principal market refers to the market with hishest level of activities. In this case, Africant will be used principal market because of the market highest volume and level of activity can be identified.

Market in Asia shown the greatest volume of vehicles sold that is 150,000 units.

However, the valuation that Africant value is not acceptable under IFRS 13 because the correct value is sales price deduct transportation cost; 38,000-700 = $37,300 per unit

The total fair value of vehicles in Asian market is $37,300x150,000 =

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Principle for the valuation of the new vehicles

In accordance to IFRS 13, the fair value of an asset or liability which exist in various market would need to be further assessed based on their principal market and most advantageous market.

Principal market refers to the market with highest level of activities. In this case, the Asia Market reported the highest volume of vehicles sold. Therefore, the Asia Market is the principal market.

However, to the determine the FV of the vehicle in the Asia Market, Africant must consider the Selling Price of the vehicle ($38,000) deduct with the Transport Costs ($700), giving a FV of $37,300.

The total FV for the 150 vehicles would be ($37,300 x 150) $xxxxxx

Assessment on the valuation by Africant

Africant intend to apply the European market is the basis for the FV of the vehicle due to the highest level of sales reported by them. This seems to be incorrect as the volume is not reported based the performance of the market, ie IFRS 13 is a market based accounting standard.

In addition, Africant considers the FV by taking the SP in the market deducting the TPC and TC which is incorrect, as FV only takes into consideraiton of the SP minus TPC.

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(i) Principal (or most advantageous) marke

In order to measure the fair value of the inventory of vehicles. Africant required to identify the principal market or in absence of the principal market, the most advantageous market for a unit of account.

In this case, the principal market is available. It shows Asia is the principal markets with the greatest volume and level of activity for agricultural vehicles. This conclude the FV of the vehicles is $37,300 ($38,000-$700).

However in the situation of principal market is not available, most advantageous market is used to determine fair value.

Under IFRS 13, Africant valuation is still unacceptable if the principal market is not available. this is because $39,100 is most advantageous market. Fair value should be $39,600.

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(i) Fair Value of of Africant 150 new vehicles

In accordance to IFRS 13, to determine the FV of any assets or liabilities it can be referred to the principal market or the most advantageous market for a unit of account.

In this case, Asia considered to be the principal market because of the highest volume and level of activity sold of vehicles.

If the principal market cannot be determined, the most advantageous market will be used to determine the fair value of the assets.

The fair value must be calculated Selling Price - Transportation Cost from the Principal Market / Most Advantageous Market.

The FV for the new vehicles is $38,000-$700 = $37,300

Thefore, Africant valuation for FV not acceptable under IFRS 13.

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(i) The Principle Market and applicable towards IFRS13

According to IFRS13, to determine the Principle Market, Africant need to reflect on the highest volume and activities of the vehicle sold in the market. In this case, Asia Market is the highest volume which 750,000 vehicle sold in the market compared to Europe and Africa Market with 150,000 and 100,000 vehicles sold respectively. Thus, it can be considered Asia Market as Principal Market. (2m)

The Fair Value for this vehicle should be $37,300. (how to derive?) (1m)

On the other hand, Africant has choose Europe Market as Principle Market due to the most advantageous market based on the highest net price. The net price for Europe Market is $39,100 meanwhile for Asia and Africa Market is $36,900 and $33,100 respectively. (2m)

With refer to IFRS13, the option to choose Most Advantageous Market method to deetrmine Europe Market as Principle Market is not appropriate. This is because the Principle Market has to be determine based the market with the greatest volume and level of activities which reflected to Asia Market. (2m)

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(ii) FV of shares in Erham

In accordance to IFRS 13, to determine the FV of any assets or liabilities it can be referred to the guidance provide by the FV Hierarchy.

In this case, the Level 1 input should first be considered in which it is applicable for quote items that are identical. However, as Mehran is determining the FV of shares in Erham that is unlisted, ie unquoted. The Level 1 hierarchy is not applicable. Hence, Level 2 or Level 3 should be considered.

As there has been preference shares being issued during the same year which is similar to the ordinary shares held by Mehran. This indicate there is observable input of quoted price for the similar assets. Hence, Level 2 should be applied.

The price of $15 for the preference shares can be used as an input to derive the basis of the FV for the ordinary shares but it has to be adjusted indirectly due to the following considerations:

i. Mehran does not carries any control via their shareholdings

ii. They are not entitled for the cumulative dividends.

iii. They are ranked below the preferred shares upon liquidation.

Hence, the $15 should be discounted further upon deriving to the FV of the ordinary shares.

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(ii) Fair Value of the shares in Erham

-Mehran cannot use Level 1 in Fair Value Hierarchy to determine the fair value because Erham is private company which are not active market. (1m)

-Mehran also cannot use Level 2 in Fair Value Hierarchy to determine the fair value because there is no quoted price for shares transaction before.

-So, Mehran must use Level 3 in determine the fair value because the is unobservable input and management need to make an assumption by doing projected cash flow.

-Venture Capital Fund hold controlling interest in Erham after preferred shares issued.

-Preferred shares rank more liquid than ordinary shares upoh liquidation of Erham

-The price of preferred shares was $15. So that price of Ordinary shares hold by Mehran must below than $15 because of Mehran have non control or Erham. (2m)

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(ii) Fair Value of the shares in Erham

According IFRS13 Hierachy Inputs, Mehran could not use Level 1 to determine the Fair Value of it shares. This is because Ehram is only a private company which is not been listed in the market.

Mehran also could not use Level 2 to determine the Fair Value of its shares due to Ehram is not a Public Listed company which the quoted shares price is not available in active market.

Thus, Mehran can use Level 3 of Hieracachy Inputs to determine her share price Fair Value. This is due to Ehram is a compamy with unobservable information in active market. Other than that, with certain restriction and involvement of Venture capital as Prefference Shareholder, it will required a complex professional judgement in order to determine the share Fair Value.