Under Market Value Accounting Methods, FIs

question 113

Multiple Choice

Under market value accounting methods, FIs

• A)must write down the value of their assets to fully reflect market values.
• B)have a great deal of discretion in timing the write downs of problem loans.
• C)must conform to regulatory write-down schedules.
• D)have an incentive to fully reflect problem assets as they become known.
• E)are required to invest in expensive computerized bookkeeping systems.

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Definitions:

Materiality

A principle in accounting and law that concerns the significance of an event, fact, or item in the context of decision-making or reporting.

Forfeiture

The loss or giving up of something as a penalty for wrongdoing or breach of contract.

Reasonable Expectations

The anticipation or belief regarding a particular outcome or behavior under ordinary circumstances by a reasonable person.

Condition Subsequent

A future event or circumstance that, if it occurs, may terminate a party's obligation under a contract.