Which of the following is needed by a client while estimating fair value?
A)A systematic process to identify each asset that is subject to realizable value or at cost.
B)A process to identify relevant historical values.
C)An analysis of whether the organization has the ability to hold the asset to maturity and whether the decline in value is permanent.
D)A realistic process to estimate future cash flows to discount back to a present value.

Question

Quizplus · Accepted Answer

To estimate fair value, a realistic process to estimate future cash flows to discount back to a present value is necessary. This requires an understanding of the expected cash flows, the timing of those cash flows, and the risk associated with them. A systematic process to identify each asset that is subject to realizable value or at cost, a process to identify relevant historical values, and an analysis of whether the organization has the ability to hold the asset to maturity and whether the decline in value is permanent may be helpful supplementary information, but they are not as critical as the estimation of future cash flows.

Which of the Following Is Needed by a Client While