What is the correct order in the hierarchy specified by IAS 41 to be used by an entity to approximate the fair value of an agricultural asset?
1) Sector benchmarks
2) Price for the asset in an active market
3) Present value of the future cash flows the asset is expected to generate
4) Market prices for similar assets, with adjustments made for the differences
5) Recent transaction price

Question

Quizplus · Accepted Answer

The correct order starts with the most reliable measure, which is the price in an active market, followed by recent transaction prices for the same asset, then market prices for similar assets with necessary adjustments, followed by sector benchmarks, and finally, if none of the above are available, the present value of future cash flows. This hierarchy ensures that the most reliable and relevant information is used first for valuation purposes.

What Is the Correct Order in the Hierarchy Specified by IAS