Under SFAS 141R, What Value of the Assets and Liabilities

question 21

Multiple Choice

Under SFAS 141R, what value of the assets and liabilities is reflected in the financial statements on the acquisition date of a business combination?

• A) Carrying value
• B) Fair value
• C) Book value
• D) Average value

---

Definitions:

Homothetic

Pertaining to a class of production functions or utility functions where equal proportionate changes in inputs result in equal proportionate changes in output.

Utility Function

An economic tool used to encode a consumer's preference orderings over a set of alternatives into a real-valued function. (Duplicate rephrase)

Income

Funds obtained regularly as a result of employment or from returns on investments.

Cobb-Douglas Utility Function

A form of utility function that represents preferences of consumers for various goods, showcasing how they allocate their spending based on the utility derived from each good, typically in the form of \(U(x,y) = x^a y^b\) where \(x\) and \(y\) are quantities of goods and \(a\) and \(b\) are positive constants.