Kramer,CPA Consulted an Independent Appraiser Regarding the Valuation of Fine

question 2

Multiple Choice

Kramer,CPA consulted an independent appraiser regarding the valuation of fine art for a not-for-profit museum.Consultation with a specialist in this case would

• A) Be considered as exercising proper due care.
• B) Be considered a failure to follow GAAS because Kramer should have known how to value fine art before accepting the engagement.
• C) Not be considered a violation of GAAS because GAAS does not apply to not-for-profit entities.
• D) None of the above.

---

Definitions:

Straight-Line Method

A depreciation method that allocates an equal portion of the initial cost of an asset to each period of its useful life.

Premium on Bonds Payable

The amount by which a bond's selling price exceeds its face value or par value, often resulting from interest rates lower than the bond's coupon rate.

Bonds Payable

Long-term liabilities representing money owed by an entity to bondholders, to be repaid at a specific future date.

Premium on Bonds Payable

The excess of a bond's sale price over its principal amount.