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Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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assets and liabilities? What implications does this principle have when a
business shows signs of financial distress?"
Transcribed Image Text:How does the going concern assumption impact the valuation of long-term
assets and liabilities? What implications does this principle have when a
business shows signs of financial distress?
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- What are the advantages of matching the maturities of assets and liabilities? What are the disadvantages?arrow_forwardHow does interest rate risk differ from reinvestment rate risk? Why is the difference important?arrow_forwardWhat makes current liabilities different from long term liabilities? Provide an example of a current asset and how it might be used to finance current assets.arrow_forward
- Which of the following is a counterbalancing error? O bond premium under-amortized O understated depletion expense overstated depreciation expenses prepaid expense adjusted incorrectlyarrow_forwardimpairments on financial instruments are ? A) recognized as a realized loss if the impairment is judged to be temporary B) based on discounted cash flows for securities C) based on fair value for available-for-sale investments and negotiated values for hel-to-maturity investments D) evaluated using the CECL model similiar to receivablesarrow_forwardWhat does it mean to adopt a maturity matching approach to financing assets, includingcurrent assets? How would a more aggressive or a more conservative approach differ fromthe maturity matching approach, and how would each affect expected profits and risk? Ingeneral, is one approach better than the others?arrow_forward
- When are losses in noncurrent security investments recognized?arrow_forwardWhich of the following is not true? GAP analysis Ignores changes in the market value of assets and liabilities. GAP analysis Ignores time value of money. GAP analysis is easy to compute and can accurately predicts the exact losses or gains Gap analysis fails to capture non-interest revenuearrow_forwardHow is the adjustment to fair value recorded differently for a cash flow hedge versus a fair value hedge? That is, how does the fair value adjustment of each type of hedge affect current period net income and the accounting equation?arrow_forward
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