If Assets Are to Be Valued at Other Than Cost

question 19

Multiple Choice

If assets are to be valued at other than cost, accounting standard IAS 16/AASB 116, Property, Plant and Equipment, requires what basis of valuation to be used?

• A) Market value
• B) Fair value
• C) The lower of cost and net realisable value
• D) No basis of valuation is specified

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Definitions:

Required Reserve Ratio

The fraction of deposits that banks are mandated to keep as reserves by the central bank to ensure liquidity and stability in the financial system.

Money Multiplier

The multiple by which the money supply changes as a result of a change in fresh reserves in the banking system.

Money-Creation Process

The procedure through which the banking system generates money by issuing loans greater than the amount of reserves it holds.

M1

The measure of a country's money supply that includes physical currency and coin, demand deposits, traveler's checks, and other checkable deposits.