Question Tag: Level 3 Inputs

Gonja Ltd is an investment company that holds a portfolio of securities linked to the real-estate market in Ghana. The following information is available at 31 July 2018 regarding this portfolio:

• The portfolio cost GH¢13 million 2 years ago.
• Real-estate prices in Ghana are generally accepted to have dropped by 20-30% in the past 2 years.
• The portfolio of securities held by Gonja is difficult to value, as there is no active market. However, the company has received an offer of GH¢2.6 million for this portfolio from an investor. It has no intention of accepting this offer, although similar companies have accepted offers from this investor due to financial difficulties.
• A normal sale in the present climate could be reasonably expected to yield GH¢6 million, based on an analysis of transactions in similar assets.
• Gonja’s valuation models suggest that the real estate market in Ghana will recover, and it expects that the portfolio will generate GH¢12 million (at present value) over the next three years.

Required:
In accordance with IFRS 13: Fair Value Measurement, advise Gonja Ltd on the amount it should state its investment portfolio in its financial statements to 31 July 2018, assuming it wishes to use fair value as measured.