AASB 116 Provides Guidance on Fair Values Which States

question 58

Multiple Choice

AASB 116 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:

Perfection

The state of being free from all flaws or defects, or achieving the highest degree of excellence.

Balloon-Payment Mortgage

A mortgage that has relatively low fixed payments during the life of the mortgage followed by one large final (balloon) payment.

Equity

Fairness or justice as applied in the correction of law or the ownership interest in a company or property.

Unperfected Security Interests

A security interest in collateral that has not been properly filed or recorded, leaving it vulnerable to claims by other creditors.