USGAAP Explicitly Defines _____ of an Asset as "The Price

question 34

Multiple Choice

U.S.GAAP explicitly defines _____ of an asset as "the price that would be received to sell an asset [or paid to transfer a liability] in an orderly transaction between market participants at the measurement date." Thus, U.S.GAAP defines it as an exit value, namely, the amount the firm would receive if it sold an asset in an orderly, arm's-length transaction at the measurement date.

• A)Current Replacement Cost
• B)Net Realizable Value
• C)Fair Value
• D)Present Value of Future Net Cash Flows
• E)Acquisition cost

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Definitions:

LIFO Reserve

The difference between the cost of inventory calculated under the LIFO method and its cost calculated under the FIFO method.

FIFO Firms

Companies that apply the First-In, First-Out method in their inventory management, recognizing the oldest inventory items as the first sold.

Investors

People or organizations that invest funds anticipating financial profits in return.

Current Cost

The cost that would be incurred to replace an asset or inventory at present prices, differing from historical cost which is based on the value at the time of acquisition.