15 Which circumstance leads to an impairment? A significant decrease in an asset's fair value A future net cash flow that is significantly greater than anticipated The presence of significantly fewer competitors than anticipated A significant reduction in the expected cost of acquiring an asset

14 which statements is incorrect regarding for value measurements? a. fair value is normally the amount that an entity would receive or pay in a forced transaction, involuntary liquidation, or distress sale. b. underlying the concept of fair value measurements is a presumption that the entity is a going concern. c. the measurement of fair value may be relatively sample for assets that are bought and sold in active and open markets. d. the estimation of fair value may be achieved through the use of valuation model or through the assistance of an expert, such as an independent appraiser.

93 Conptal Framo PROBLEMS PROBLEM 1: TRUE OR FALSE All changes in an entity's economic resources and claims to those resources result from the entity's financial performance. The qualitative characteristics of useful information apply nly to the financial information provided in the financial statements. . According to IFRS Practice Statement 2 Making Materiality Judgnents, cost is an important consideration when making materiality judgments. T, When making materiality judgments, assessment alone is not always sufficient to conclude that an item of information is not material. Es. Materiality judgments apply only to items that are recognized but not to those that are unrecognized. 6. The more significant the qualitative factors are, the lower the quantitative thresholds will be. Thus, an item with a zero amount can be material in light of qualitative thresholds. Fz. When making materiality judgments, an entity should judge an item's materiality only on its own and not in combination…

As the required rate of return on an asset decreases 1. 11. III. Asset prices increase because the cash flows increase Asset prices increase because the present value of cash flows increases Asset prices decrease because there is a negative relationship between prices and returns O a. I only O b. lll only O c. Il only O d. I and II e, II and III

Which of the following statements describing the elements of intrinsic valuation is most accurate? A.) When the present value of the cashflows is discounted with the appropriate rate and this present value is positive, then the asset providing these cashflows has a value to the investor. B.) The risk-free rate is the lowest rate that an investor can earn from short-term investments. C.) Cashflows may include depreciation expenses and amortization costs. D.) A simple calculation of present values of expected cashflows of different investments using the risk free rate would be enough to determine which asset is best.

[S1] An investor should buy an asset when it is undervalued and sell the asset when it is overvalued. [S2] An investor should hold onto an investment when it is expected to appreciate in value.a. Only S1 is true.b. Only S2 is true.c. Both are true.d. Both are false.

Market risk ________.   a. is equal to the rate of return generated by a risk-free asset b. cannot be eliminated, as it is non-diversifiable c. is synonymous with diversifiable risk d. is synonymous with financial risk

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When a depreciable asset is sold, with no proceeds (i.e., sold for zero), then it can be ignored for decision making because there is by definition no impact on cash flow. Group of answer choices True False

Which of the following statements about fair value is true? Fair value accounting is also known as "mark-to-market" accounting. O Level 3 inputs are observable market prices for similar assets in active markets. O Fair value is a measure of market-based entry value. O Level 1 inputs should be used to determine fair value only when Level 2 and Level 3 inputs are not available.