The Existence of Subjectivity in an Asset Valuation Does Not

question 40

Multiple Choice

The existence of subjectivity in an asset valuation does not necessarily mean the valuation will not be reliable.All of the following are examples of this except:

• A) where historical cost is used for accounts receivable, fixed assets, and other assets with values that remain relatively stable.
• B) where market value is used for marketable equity securities, commodities, and financial assets are traded in liquid markets
• C) where historical cost is used for LIFO inventory layers where inventory has seen an inflationary increase in costs.
• D) where historical cost is used for internally generated intangible asset valuations.

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Definitions:

Validity

The degree to which a tool, test, or method accurately measures what it is supposed to measure.

Tax Advantages

Financial benefits conferred by tax laws to encourage certain activities or investments.

Biodiversity Rating

A quantification or evaluation of the diversity of plant and animal life in a particular habitat or ecosystem.