AS - 13 Accounting for Investments

Others 1261 views 3 replies

Raman

Artilcle Assistant

57 Points Posted on 04 May 2009

Dear All,

In AS 13 definition of Fair value includes a term " At arms Length " Pls clear me the meaning of this term, and in nowdays transactions there are mostly transactions took place online then what would be the relevance of such term,

Waiting for reply

Thanks & Regards

Raman Gora

Replies (3)

Isha Gupta

Chartered Accountant

180 Points Posted on 04 May 2009

this term is used only in case there is no active market for such kind transactions. It true that now-a-days transactions take place online yet there are many unlisted securities.

CA Anisha Ray

Service

289 Points Posted on 07 May 2009

Dear Raman,

Arms length Price is a connotation used to indicate that the Price agreed at between the Buyer and the seller was Prudent and not affected by any kind of relationship or mutual understanding between them.

It is the price agreed upon after taking into consideration the Fair market value of the commodity in question, and if there is no active market then as per their own judgement.

Even in case of Online transactions, the essence would be to find out if the Price paid was Fair or not, considering the market value of similar product.

Raman

Artilcle Assistant

57 Points Posted on 08 May 2009

Originally posted by :CA Anisha Ray
"	Dear Raman, Arms length Price is a connotation used to indicate that the Price agreed at between the Buyer and the seller was Prudent and not affected by any kind of relationship or mutual understanding between them. It is the price agreed upon after taking into consideration the Fair market value of the commodity in question, and if there is no active market then as per their own judgement. Even in case of Online transactions, the essence would be to find out if the Price paid was Fair or not, considering the market value of similar product.	"

Thanks Aisha,