The Following Assumptions Are Made When Measuring the Fair Value

question 6

Multiple Choice

The following assumptions are made when measuring the fair value of an equity instrument except for:

• A) The market participant transferee will take on the rights and responsibilities associated with the instrument.
• B) An entity's own equity instrument would remain outstanding.
• C) The instrument would not be cancelled or otherwise extinguished on the measurement date.
• D) An entity's own equity instruments are transferred to a market participant at transfer date.

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Definitions:

Statement of Owner's Equity

A financial statement that shows changes in the equity of a company's owner(s) over a period, including investments, withdrawals, and the company's net income or loss.

Accumulated Depreciation

Full amount of depreciation expenses that have been attributed to a fixed asset since it was deployed.

Financial Statements

Reports that summarize the financial performance and health of a business including balance sheet, income statement, and cash flow statement.

Balance Sheet

A summary record that outlines a firm's assets, liabilities, and equity held by shareholders at a specific timeframe, showing its financial status.