If a Debt Instrument with No Ready Market Is Exchanged

question 20

Multiple Choice

If a debt instrument with no ready market is exchanged for property whose fair value is currently indeterminable.

• A) The board of directors of the entity receiving the property should estimate a value for the property that will serve as a basis for the transaction
• B) The present value of the debt instrument must be approximated using an imputed interest rate
• C) The directors of both entities involved in the transaction should negotiate a value to be assigned to the property
• D) It should not be recorded on the books of either party until the fair value of the property becomes evident

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Definitions:

Hammer, Anvil, Stirrup

The three smallest bones in the human body, located in the middle ear, that play a key role in transmitting sound vibrations to the inner ear.

Cochlea

A spiral-shaped cavity in the inner ear that plays a key role in hearing by converting sound vibrations into nerve impulses.

Fluid-Filled Tube

A tube that contains fluid, often found in biological systems and mechanical devices, used for various functions such as cushioning or transport.

Pitch

A tone’s experienced highness or lowness; depends on frequency.