Which of the Following Is an Advantage of Fair Value

question 35

Multiple Choice

Which of the following is an advantage of fair value accounting for financial assets over historical cost accounting?

• A) Asset values tend to be more relevant.
• B) "Gains trading" to manage earnings is less likely.
• C) All the assets are measured at the same date, making adding the values together mathematically meaningful.
• D) All of the above.

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Definitions:

Merchandise

Goods available for sale in a retail or wholesale environment.

Journalize

The act of recording transactions in an accounting journal in chronological order.

Interest Expense

The cost incurred by an entity for borrowed funds, represented as an expense on the income statement.

Discount Rate

The discount rate employed to calculate the current value of future cash flows in a discounted cash flow assessment.