Value-in-use is O a. The discounted present value of future cash flows arising from use of the asset and from its disposal. O b. The amount at which an asset is recognized in the statement of financial position. O C. The higher of amasset's fair value less cost to sell and its market value. O d. The market value.

Value-in-use is O a. The discounted present value of future cash flows arising from use of the asset and from its disposal. O b. The amount at which an asset is recognized in the statement of financial position. O C. The higher of amasset's fair value less cost to sell and its market value. O d. The market value.

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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How is valuation of any financial asset related to future cash flows?
b. Disregard the assumptions in Part a. What is the depreciable basis? What are the annual depreciation expenses? c. Calculate the annual sales revenues and costs (other than depreciation). Why is it important to include inflation when estimating cash flows? d. Calculate annual net operating profit after sales (NOPAT). Then calculate the operating cash flows.
11. Which type of financial assets are purchased only with the intent of selling them in the near future? DAFVTPL financial assets ⒸBFVTOCI Financial assets C. Amortized Cost financial assets OD. Investment accounted for using the equity method
A. Which of the following is most closely associated with the cost of using assets? a. Asset utilization b. Sales revenue c. Proportion of debt and equity d. Average price B. Which of the following is most closely associated with the return on management’s use of assets? a. Cost of capital b. Mix of equity types c. Prime lending rate d. # of products sold
Fair value as a method of asset measurement is defined as: Multiple Choice O O the cost of an asset adjusted for the depreciation or amortization accumulated over its lifetime. price that would be received to sell assets in an orderly transaction between market participants on a given date. the net amount of cash into which an asset could be converted in the ordinary course of business. the value of what is given in exchange for the asset at its initial acquisition.
The present value of an investment's future cash flows divided by its initial cost is the: O Net present value. O Internal rate of return. O Average accounting return. O Profitability index. O Payback period.
On the balance sheet date, the book value (or carrying value) of an asset should always equal the asset's fair value. Select one: True False
The balance sheet reflects the application of various valuation methods. Which of the methods listed may be used on a balance sheet that follows generally accepted accounting principles? Multiple Choice Current cash equivalent value All of the three specific alternatives are correct Acquisition cost All of the three specific alternatives are correct Acquisition cost None of the other alternatives are correct Present value of future cash flows
. How does one determine the value of any assetwhose value is based on expected future cash flows?
NPV measures a. the change in firm value b. the profitability of an investment c. the change in wealth d. the present value of the future net cash flows from the investment e. all of the above
Which of the following are the key factors when determining asset allocation for an investment? I. Time an investor has until he needs to use the money from the investment (time horizon) II. Risk preferences (tolerance for risk) III. Current financial situation a. I., II., & III. b. I. & III. c. II. & III. d. I. & II.
The basic principle of valuation states that the value of any asset is: O The sum of the present value of all cash flows generated by the assetO The sum of all future cash flows generated by the assetO The present value of next year's cash flow onlyO The degree of cash flow riskiness is not a relevant factor in valuation