The effect of determining the principal market [IFRS 13.IE19-20]
An asset is sold in two different active markets at different prices. An entity enters into transactions in both markets and can access the price in those markets for the asset at the measurement date.
| Market A | Market B | |
| Price that would be received | 26 | 25 |
| Transaction costs in that market | (3) | (1) |
| Costs to transport the asset to the market | (2) | (2) |
| Net amount that would be received | 21 | 22 |
If Market A is the principal market for the asset (i.e. the market with the greatest volume and level of activity for the asset), the fair value of the asset would be measured using the price that would be received in that market, even though the net proceeds in Market B are more advantageous. In this case, the fair value would be CU24 after taking into account transport costs.
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