Fair value measurementBurnham Co. has an asset that is sold in two different active markets. Priceinformation from the two markets is as follows:Market #1Market #2Market priceTransaction costsTransport costs2702656.1015Requirements:a. If Market #2 is the principal market for the asset, how much is the fairvalue?b. If neither market is the principal market for the asset, how much is thefair value?

Fair value of asset will be the price which the asset will fetch at the principal market . Fair…

Answered: Fair value measurement Burnham Co. has…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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4. The order of the 'fair value hierarchy' nominated by the FASB's SFAS 157 is: i. Quoted prices for similar assets or liabilities in active markets, adjusted ii. Quoted prices for identical assets and liabilities in active reference markets, unadjusted iii. Multiple valuation techniques consistent with the market, income and cost approaches a. Levels ii, i, iii b. b. Levels i, ii, iii c. Levels iii, ii, i d. Levels ii, iii, it
For each situation, list the assumption, principle, or constraint that has been violated, if any. List only one answer for each situation. a. East Lake Company recognizes revenue at the end of the production cycle but before sale. The price of the product, as well as the amount that can be sold, is not certain. choose one of the assumption, principle or constraint Going concern assumptionPeriodicity assumptionNo violationHistorical cost principleRevenue recognition principleEconomic entity assumption b. Hilo Company is in its fifth year of operation and has yet to issue financial statements. (Do not use the full disclosure principle.) choose one of the assumption, principle or constraint Historical cost principleGoing concern assumptionRevenue recognition principleNo violationPeriodicity assumptionEconomic entity assumption c. Gomez, Inc. is…
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4. The cost of an asset and its fair value are Select answer from the options below: a) irrelevant when the asset is used by the business in its operations. b)never the same. c) the same on the date of acquisition. d) the same when the asset is sold. 6. If the sum of the debit column equals the sum of the credit column in a trial balance, it indicates Select answer from the options below: a. no errors can be discovered. b. no errors have been made. c. the mathematical equality of the accounting equation. d . that all accounts reflect correct balances. 7. The final step in the recording process is to Select answer from the options below: a. enter the transaction in a journal. b. prepare a trial balance. c. transfer journal information to ledger accounts. d. analyze each transaction. 8. The time period assumption states that Select answer from the options below: a. the economic life of a business can be divided into artificial time periods. b. estimates should not be made if a…

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