Fair value measurement memo

Context

Sagrafo Industries (fictitious entity) runs a metalworking shop at Valmont on land with a building, accounted for under the revaluation model, and an installed handling line. At the 31 December 20X5 year-end, the valuation committee must measure the fair value of the site and of the line; management considers the current use optimal, but an investor is thinking of a logistics warehouse.

Assignment

Fair value measurement memo

Purpose of the workpaper

For each item measured (one instance per item), describe the item and its unit of account, compare the markets available (net amount received, volume and activity), document the highest and best use of a non-financial asset (value under each use less conversion costs), reconcile the indications of the techniques (weighting, expected cash flow, present value), then justify the three judgements: reference market, highest and best use, unobservable inputs.

Questions of the file covered by this workpaper

• Compute the expected exit price of the converted site.
• Discount it at the rate of the internal note.
• Which indication should be retained for the value of the warehouse use? Justify.
• Compute the net value under each use.
• What is the value under the highest and best use?

• ExtractFixed asset registerOpen
• ScheduleStudy of the uses of the siteOpen
• ScheduleValuation of the converted siteOpen
• MemoNote on the handling lineOpen
• MemoUpkeep budgetOpen