Page 9 - 26. COMPILER QB - IND AS 113

Rs
Price receivable 280

Less: Transportation cost (30)
Fair value of the asset 250
ii) Export prices are more than the prices in the principal market and it would give the highest return

compared to the domestic market. Therefore, the export market would be considered as the most
advantageous market. But since the Government has capped the export, maximum upto 15% of total output,
maximum sale activities are being done at domestic market only i.e. 85%. Since the highest level of
activities with the highest volume is being done in the domestic market, the principal market for assets

would be the domestic market. Therefore, the prices received in the domestic market would be used for fair
valuation of assets.

Q7 (December 21 – 4 Marks)

Mr Q has determined the valuation of Rhythm Ltd by two approaches i.e. Market Approach and Income
approach and select the highest as the final value but the management of Rhythm Ltd is not satisfied and
requests you to determine the fair value of shares of Rhythm Ltd by assigning the weights to Market
Approach and Income approach in the ratio of 7:3.

Determine the Equity value of on the basis of below details:
Particulars Rs. in crore
Valuation as per Market Approach 35,82,380

Valuation as per Income Approach 21,99,930
Debt obligation as on Measurement date 9,96,812
Surplus cash & cash equivalent 2,10,388

Fair value of surplus assets and Liabilities 3,12,449
Number of shares of KK Ltd. 1,06,680 shares

SOLUTION
Equity Valuation of Rhythm Ltd.

Particulars Weights (Rs in crore)
As per Market Approach 70 35,82,380
As per Income Approach 30 21,99,930
Enterprise Valuation based on weights 56,75,312

(35,82,380 x 70%) + (21,99,930 x 30%)
Less: Debt obligation as on measurement date (9,96,812)

Add: Surplus cash & cash equivalent 2,10,388
Add: Fair value of surplus assets and liabilities 3,12,449
Enterprise value of Rhythm Ltd. 52,01,337

No. of shares 1,06,680
Value per share 48.75

26. 8