Which of the following is the best example of how a market-value balance sheet item differs from the firm's book-value balance sheet item?
A) A firm issued long-term bonds five-years ago that currently sell for par value.
B) A firm sold common stock twenty-years ago for $20.00 a share. The firm's common stock is currently selling for $96.50 per share.
C) A firm has $5 million of accrued liabilities on the books.
D) A firm issued preferred stock ten-years ago. These shares of preferred stock currently are selling for par value.

Question

Quizplus · Accepted Answer

The market value of the firm's common stock is currently $96.50 per share, which is significantly higher than the book value of $20.00 per share, indicating a difference between the market-value balance sheet item and the book-value balance sheet item. The other options do not show a significant difference between the market value and book value of the balance sheet items.

Which of the Following Is the Best Example of How