Module 9D: Financial Statements

Question 1

Valuation Technique to measure fair value: Market Approach

Answer 1

Uses prices and relevant information from market transactions for identical or comparable assets or liabilities.

Question 2

Valuation Technique to measure fair value: Income Approach

Answer 2

Converts future amounts to a single (current) discounted amount.

Question 3

Valuation Technique to measure fair value: Cost Approach

Answer 3

Relies on the current replacement cost to replace the asset with a comparable asset, adjusted for obsolescence.

Question 4

Principal Market

Answer 4

A market in which the greatest volume and level of activity occurs.

Question 5

Most Advantageous Market

Answer 5

Maximizes prices received for the asset or minimizes the amount paid to transfer the liability.