Question

n Where a liability is held as a corresponding asset by another entity, the fair value...

n

Where a liability is held as a corresponding asset by another entity, the fair value of the liability is determined from the perspective of a market participant that:

Group of answer choices

applies a present value technique to measure the liability.

applies the cost approach to valuing the liability.

calculates the amount required to settle the present obligation.

holds the identical item as an asset at measurement date.

Homework Answers

Answer #1

The answer is "applies a present value technique to measure the liability".

As per FASB Statement No. 157, the fair value of a liability is determined from the perspective of a market participant by using the following priciples:

Level 1: Using the quoted price of the identical liability when traded as an asset,

Level 2: Using quoted prices for similar liabilities or similar liabilities when traded as assets, or

Level 3: When none of the level 1 or 2 information is available, by applying certain income or market-based techniques such as a present value technique.

As the liability is held as a corresponding asset by another entity, the level 3 technique is used

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
An entity has an asset that was classified as held for sale. However, the criteria for...
An entity has an asset that was classified as held for sale. However, the criteria for it to remain as held for sale no longer apply. The entity should therefore; Select one: a. measure the noncurrent asset at the lower of its carrying amount before the asset was classified as held for sale (as adjusted for subsequent depreciation, amortization, or revaluations) and its recoverable amount at the date of the decision not to sell. b. remeasure the noncurrent asset at...
The definition of fair value is "...the price that would be received to sell an asset...
The definition of fair value is "...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." The fair value hierarchy is as follows: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable...
Gender Bias in the Executive Suite Worldwide The Grant Thornton International Business Report (IBR) has described...
Gender Bias in the Executive Suite Worldwide The Grant Thornton International Business Report (IBR) has described itself as "a quarterly survey of business leaders from across the globe … surveying 11,500 businesses in 40 economies across the globe on an annual basis." 1 According to the 2011 IBR, the Asia Pacific region had a higher percentage (27 percent) of female chief executive officers (CEOs) than Europe and North America. Japan is the only Asia Pacific region exception. The report further...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT