Accounting
Difference Between Principal Market And Most Advantageous Market
Principal market:
The market with the greatest volume and level of activity for the asset or liability is Principal Market . Because there may be buyers and sellers who are willing to pay high prices and deal outside the principal market, the most advantageous market may not be the principal market.
However, an entity may assume that the principal market is the most advantageous market provided that the entity can access the principal market.
Most advantageous market:
This is the market that maximizes the amount that would be received to sell the asset or minimizes the amount that would be paid to transfer the liability, after considering transaction costs and transport costs.
Finally, as a practical matter, it would be reasonable to presume that the principal market in which an entity actually transacts would be the most advantageous market, consistent with rational economic behavior. Some respondents said that applying a most advantageous view would require continuous evaluation of secondary markets to determine whether quoted prices for identical assets are more advantageous.
