FV - Recognition And Measurement

Question 1

What valuation technique has been used when the fair value of an asset is determined as the amount that currently would be required to replace the service capacity of the asset?

Answer 1

Cost Approach

Question 2

Income Approach

Answer 2

The income approach converts future amounts (e.g. of cash flows) to a current present value to determine fair value

Question 3

If a firm changes the valuation approach used to determine fair value, how would the amount if change in fair value resulting from the change in the valuation approach be reported?

Answer 3

As a change in accounting estimate

Question 4

Market Approach

Answer 4

The market approach determines fair value by using prices and other relevant information generated by market transactions involving items that are identical or comparable to those being valued.