IAS 16 Provides Guidance on Fair Values Which States

question 48

Multiple Choice

IAS 16 provides guidance on fair values which states:

• A)Where an active and liquid market exists for an asset, the market price represents evidence of the asset's fair value.
• B)Fair values are determined on the basis that an entity is a going concern.
• C)Where no market exists the price should be based on the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction.
• D)All of the given answers are correct.

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Definitions:

Decreasing Unit Costs

A situation in which costs per unit of output fall as the volume of production increases, often due to economies of scale.

Higher Amount

A term that refers to a value that is greater when compared with another quantity or measure.

Specific Identification

A method of inventory valuation that tracks the actual cost of each specific item in inventory.