Reference no: EM132826251

Question - John Pte Ltd exports Brand X car navigation system to three markets, namely China, Malaysia and Thailand. The company was approached by a car manufacturer with the intention to buy over the company. The company currently holds 1,600 units of the Brand X car navigation system in its inventory.

Information on the company's transaction of the product in the three markets are as follows:

China Market

- Sales price $380 per unit

- Units sold by company - 3,000

- Transport costs $50 per unit

- Transaction costs $10 per unit

Malaysia Market

- Sales price $385 per unit

- Units sold by company - 2,200

- Transport costs $30 per unit

- Transaction costs $6 per unit

Thailand Market

- Sales price $390 per unit

- Units sold by company - 3,300

- Transport costs $40 per unit

- Transaction costs $7 per unit

In preparing the financial statement for the buyer's consideration, John Pte Ltd valued the inventory at $624,000.

You are approached by the buyer to evaluate the purchase. You have the market information of the product in the three markets.

Market volume:

China Market - 40,000

Malaysia - 23,000

Thailand- 31,000

Discuss the proposed price of the inventory by John Pte Ltd and advice the buyer as to whether it would be acceptable under FRS 113 Fair Value Measurement. Workings must be clearly shown.