The Application of GAAP Requires Firms to Write Down Assets

question 1

Short Answer

The application of GAAP requires firms to write down assets whose fair values decrease below their book values,but does not allow firms to revalue upward the values of assets whose fair values have increased.This asymmetric treatment rests on the ________________________________________.

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Definitions:

Liking

A positive emotional response or preference for someone or something.

Charles Darwin

A British naturalist renowned for his theory of evolution and the process of natural selection.

Leon Festinger

A psychologist known for his theory of cognitive dissonance, which suggests that people experience discomfort when they hold contradictory beliefs, leading them to change their attitudes or behaviors.

Robert Zajonc

A psychologist known for his work on social facilitation, the mere exposure effect, and the interplay between affective and cognitive processes.