Companies are not required to, but have the option to, value some or all of their financial assets and liabilities at fair value. O True O False
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- . Which of the following statements is true? a. The fair value option requires that some types of financial instruments be recorded at fair value. b. The fair value option requires that all noncurrent financial instruments be recorded at amortized cost. c. The fair value option allows, but does not require, that some types of financial instruments be recorded at fair value. d. The FASB and IASB would like to reduce the reliance on fair value accounting for financial instruments in the future.If an entity has elected to use the fair value option for a financial liability; a. It is measured at fair value through other comprehensive income. b. It is measured at fair value through profit or loss. c. It is measured at amortized cost. d. Fair value op don is prohibited for financial liabilities.The use of the fair value option to account for Non - current liabilities is allowed by IFRS . Many companies would prefer to use the fair value option . Do you agree ? Explain why .
- if the shareholders position is not protected by a contract unlike the provider of debt how is it in fact made viable?6. What is the proper treatment for noncash asset received from a non-stockholder? Group of answer choices a. The share premium shall be credited for the fair value of the noncash asset. b. The share premium shall be credited for the book value of the noncash asset. c. The income account shall be credited for the fair value of the noncash asset. d. The income account shall be credited for the book value of the noncash asset.If a company has declared bankruptcy, its financial statements likely violate: Multiple Choice O O O O The stable monetary unit assumption. The fair value measurement approach. The going concern assumption. The present value measurement approach.
- IFRS requires companies to measure their financial assets at fair value except when based on:(a) whether the equity method of accounting is used.(b) whether the fi nancial asset is a debt investment.(c) whether the fi nancial asset is an equity investment.(d) whether an investment is classifi ed as trading.Which of the following is characteristic of liabilities ratherthan of equity? (More than one answer may be correct.)a. The obligation matures.b. Interest paid to the provider of the capital is deductiblein the determination of taxable income.c. The capital providers’ claims are residual in the eventof liquidation of the business. d. The capital providers normally have the right to exer-cise control over business operations.TRUE OR FALSE?An entity is solvent if it can pay its currently maturing obligation.
- How should the capital market react to (a) the disclosure that a patent infringement suit involving Plavix had been filed against BMY and (b) the disclosure that the suit had been lost (won)Investments in equity securities for which the investor has insignificant influence over the investee are classified for reporting purposes under the fair value method. What is fair value?18. What is the proper treatment for noncash asset received from a stockholder? Group of answer choices a. The share premium shall be credited for the fair value of the noncash asset. b. The share premium shall be credited for the book value of the noncash asset. c. The income account shall be credited for the fair value of the noncash asset. d. The income account shall be credited for the book value of the noncash asset.