Smith Corporation has a building which is being reclassifed from PPE to an investment. The building is now required to be valued at fair value as of the balance sheet date. Smith originally paid $375,000 for the building and the current carrying value is $350,000. External valuations have determined that the building's fair value should be $360,000. Smith's CEO has argued Smith Corporation would never sell the building for less than $425,000. What is the correct fair value and why? Question 10 options: a) $350,000 because that is the carrying value of the building b) $425,000 because that is the minimum sales price Smith would accept c) $360,000 because that is the perspective of the market d) $375,000 because that is the entrance price
Smith Corporation has a building which is being reclassifed from PPE to an investment. The building is now required to be valued at fair value as of the balance sheet date. Smith originally paid $375,000 for the building and the current carrying value is $350,000. External valuations have determined that the building's fair value should be $360,000. Smith's CEO has argued Smith Corporation would never sell the building for less than $425,000. What is the correct fair value and why?
Question 10 options:
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