Which of the Following Is a Common Substantive Test of the Valuation

question 49

Multiple Choice

Which of the following is a common substantive test of the valuation assertion for PPE and intangible assets?

• A)Observe physical inventory taking of the fixed assets and compare with detailed asset records.
• B)For property valued at fair value,examine and verify supporting valuation evidence,such as independent appraisals.
• C)Recalculate amortization expense and trace to general ledger account(s).
• D)From a sample of items from the asset subsidiary records,inspect title or other ownership legal documents,

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Definitions:

Cash Inflows

The sum of funds entering a company, usually from operational, investment, and financial activities.

Exchange Rate

The worth of one currency when converted into another.

Inflation Rate

The rate of increase in the general price level for goods and services, undermining consumer purchasing ability.

Net Present Value

A profitability measure for an investment that is determined by deducting the present value of cash outflows from the present value of cash inflows throughout a specific time frame.