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
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.
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.
| 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,
CAclubindia
