U.S.GAAP explicitly defines _____ of an asset as "the price that would be received to sell an asset [or paid to transfer a liability] in an orderly transaction between market participants at the measurement date." Thus, U.S.GAAP defines it as an exit value, namely, the amount the firm would receive if it sold an asset in an orderly, arm's-length transaction at the measurement date.
A)Current Replacement Cost
B)Net Realizable Value
C)Fair Value
D)Present Value of Future Net Cash Flows
E)Acquisition cost

Question

Quizplus · Accepted Answer

U.S.GAAP defines the value of an asset as Fair Value, which is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. It is an exit value, i.e., the amount the firm would receive if it sold an asset in an orderly, arm's-length transaction at the measurement date. Other options like Current Replacement Cost, Net Realizable Value, and Acquisition Cost may be used in certain cases, but they are not explicitly defined by U.S.GAAP as the value of an asset. Present Value of Future Net Cash Flows is used to determine the value of an investment, not an asset.

USGAAP Explicitly Defines _____ of an Asset as "The Price