Which of the Following Is True Regarding the Traditional Approach

question 37

Multiple Choice

Which of the following is true regarding the traditional approach to estimating the fair value of an intangible asset?

• A) The traditional approach requires the use of the risk-free rate of interest.
• B) The traditional approach requires the use of various possible outcomes and their probability of occurrence.
• C) The traditional approach requires the use of judgment in determining a risk-adjusted rate of interest.
• D) The traditional approach requires the assumption that cash flows occur at the beginning of each period (an annuity due).

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Definitions:

Primary Benefit Test

A legal doctrine used to determine who is the primary beneficiary of a service or transaction, often influencing the decision on liability or responsibility under the law.

Privity of Contract

The relationship that exists between the parties involved in a contract, allowing them to sue each other but preventing any third party from doing so.

Fraud

involves deliberate deception to secure unfair or unlawful gain, or to deprive a victim of a legal right.

Generally Accepted Auditing Standards (GAAS)

A set of guidelines for auditors working on companies' finances, ensuring audits are systematically conducted with integrity, objectivity, and professionalism.