For loans to nonconsolidated subsidiaries and other companies,an analyst can estimate the asset's value by using the reported book value if the loan was made using fair market terms and if the borrower's credit risk and general interest rates have not changed significantly since the loan was made.

Question

Quizplus · Accepted Answer

If the loan was made using fair market terms and if the borrower's credit risk and general interest rates have not changed significantly since the loan was made, then the reported book value can be a reliable estimate of the asset's value. However, if these conditions are not met, the analyst may need to make adjustments to the reported book value or use other methods to estimate the asset's value.

For Loans to Nonconsolidated Subsidiaries and Other Companies,an Analyst Can