Deck5 Flashcards
If a company intends to implement the Fair Value option, to value an asset, it must do so on the day it acquired the asset. T or F
True
Fair Value is assessed at Principle Market price. T or F
True
A company can’t use Fair Value to assess a subsidiary that is to be consolidated. T or F
True
Name the three Approaches that can be used to determine Fair Value
Market Approach, Income Approach, Cost Approach
Fair Value option is irrevocable. Once you declare it you can’t go back (except in rare circumstances). T or F
True
Internally generated cash flow statements are not an observable input T or F
True
Inputs used to determine Fair Value may be either (a) observable, (b) unobservable or (c) both
(c) both
Fair value hierarchy starts at level 1 and goes to level ____.
3
Inputs that are used to determine fair value can be unobservable inputs and are considered level ____.
3
“Inputs” are assumptions and date used in valuation techniques T or F
T
Level 3 disclosure
Description of the valuation process, Quantitative info about unobservable inputs, narrative description of sensitivity to changes in unobservable inputs, amounts of gains and losses for period due to change in unrealized gains/losses for items still held at measurement date and where reported
Disclosure requirements for Fair Value on Non recurring basis
Reason, Level in hierarchy, (level 2 or 3) description in changes of technique
Gains/Losses are from “Incidental” not “Primary” activities
True
Examples of Gains/Losses
sales of assests, interest income, interest expense
Sales - COGS = ?
“Gross” Profit
