Companies are not required to, but have the option to, value some or all of their financial assets and liabilities at fair value. O True O False
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- FASB allows debt to be shown at its fair market value. Consequently, if a company in financial difficulty uses the fair value option, it would report a gain because investors no longer want to purchase its debt. Do you think that this is appropriate?The use of the fair value option to account for Non - current liabilities is allowed by IFRS . Many companies would prefer to use the fair value option . Do you agree ? Explain why .6. What is the proper treatment for noncash asset received from a non-stockholder? Group of answer choices a. The share premium shall be credited for the fair value of the noncash asset. b. The share premium shall be credited for the book value of the noncash asset. c. The income account shall be credited for the fair value of the noncash asset. d. The income account shall be credited for the book value of the noncash asset.
- What is the fair value option? Where do companies that elect the fair value option report unrealized holdingHow should the capital market react to (a) the disclosure that a patent infringement suit involving Plavix had been filed against BMY and (b) the disclosure that the suit had been lost (won)If the assumption that companies pay no tax in Modigliani & Miller Proposition is relaxed, while the other two assumptions still hold, how will the value of a company be affected?
- if the shareholders position is not protected by a contract unlike the provider of debt how is it in fact made viable?One key value of limited liability is that it lowers owners' risks and thereby enhances a firm's value.a.Trueb.False18. What is the proper treatment for noncash asset received from a stockholder? Group of answer choices a. The share premium shall be credited for the fair value of the noncash asset. b. The share premium shall be credited for the book value of the noncash asset. c. The income account shall be credited for the fair value of the noncash asset. d. The income account shall be credited for the book value of the noncash asset.
- Which of the following is correct about subsequent measurement of financial asset at fair value? a. the financial asset shall be measured at fair value if the business model is not to collect contractual cash flows on specified dates and the contractual cash flow ae not solely payment of principal and interest. b. An entity may designate a finacncial asset as measured at fair value through profit or loss even if the financial asset satisfies the amortized cost measurement. c. both are correct d. both are incorrectAll of the following are true of the effect of fair value accounting on the financial statements except: a. any difference between the original cost or the prior period’s fair value must be recorded b. changes in the fair value of trading securities are recognized on the income statement c. valuation allowance accounts are reported on the balance sheet d. changes in the fair value of available-for-sale securities are recognized on the income statementWhich of the following statements is false? a. The monetary unit assumption is used under IFRS. b. Under IFRS, companies may use fair value for property, plant, and equipment. c. The FASB and IASB are no longer working on a joint conceptual framework project. d. Under IFRS, the concept of prudence is not considered.