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AICPA CPA-Financial Exam - Topic 1 Question 97 Discussion

Actual exam question for AICPA's CPA-Financial exam
Question #: 97
Topic #: 1
[All CPA-Financial Questions]

Which of the following statements regarding fair value is/are correct?

1. The fair value of an asset or liability is specific to the entity making the fair value measurement.

2. Fair value is the price to acquire an asset or assume a liability.

3. Fair value includes transportation costs, but not transaction costs.

4. The price in the principal market for an asset or liability will be the fair value measurement.

Show Suggested Answer Hide Answer
Suggested Answer: C

Choice 'C' is correct. This affects only the prospective (current and subsequent) periods - not prior periods, not retained earnings.


by Clay at Sep 15, 2024, 08:29 AM

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Catina
4 months ago
Fair value does not include transaction costs, just transportation.
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Trina
5 months ago
#4 is spot on, principal market price is key for fair value.
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Gail
5 months ago
Surprised to see #3, thought transaction costs were included!
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Mona
5 months ago
I disagree with #2, it's not just about acquisition price.
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Linwood
5 months ago
Fair value is entity-specific, that's true.
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Lashaunda
6 months ago
I vaguely remember that transaction costs shouldn't be included in fair value, which makes me lean towards statement III being correct.
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Lai
6 months ago
I feel like we discussed the principal market concept in class, so maybe statement IV is correct, but I'm uncertain about the others.
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Annice
6 months ago
I think statement II sounds familiar from our practice questions, but I can't recall if fair value includes transportation costs.
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Jovita
6 months ago
I remember that fair value is supposed to be market-based, but I'm not sure if it's specific to the entity.
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Dominga
6 months ago
Alright, I'm going to read through the statements again and try to eliminate the ones that don't seem quite right. Gotta be careful with these tricky accounting concepts.
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Clorinda
6 months ago
I think the second statement about fair value being the price to acquire an asset or assume a liability is on the right track. But I'm not sure about the other statements.
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Marguerita
6 months ago
Okay, let me see here. I know fair value is supposed to be an objective measure, so I'm not sure if the first statement about it being specific to the entity is correct.
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Cathrine
6 months ago
Hmm, this seems like a tricky one. I'll need to carefully read through each statement and think about what the definition of fair value is.
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Sylvia
6 months ago
The transportation costs part in the third statement is throwing me off. I'll need to double-check the definition to see if that's included in fair value.
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Brock
11 months ago
I heard the fair value of my answers is about tree fiddy. Not sure if that's correct, but it's the best I can do.
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Rebbecca
10 months ago
User 3: So, the fair value is not about tree fiddy then?
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Patti
10 months ago
User 2: I agree, fair value is specific to the entity and it's the price to acquire an asset or assume a liability.
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Lezlie
11 months ago
User 1: I think the correct statements are I & II.
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Cherilyn
11 months ago
Wait, are we supposed to know the difference between fair value and the price to acquire an asset? I thought they were the same thing. This exam is rigged, I tell you!
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Izetta
11 months ago
The price in the principal market for an asset will be the fair value measurement.
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Stevie
11 months ago
Yes, fair value includes transportation costs but not transaction costs.
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Shantell
11 months ago
Fair value is specific to the entity making the measurement, while price to acquire is the actual cost.
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Brigette
11 months ago
Hmm, I'm not sure about this one. I guess I'll just pick the answer that sounds the most like something an accountant would say, which is probably C) II & III.
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Erick
12 months ago
Hold on, are you telling me that transportation costs are included but not transaction costs? That's like saying I can get to the store for free but I have to pay for the items. Sounds like a trick question to me.
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Myong
11 months ago
I agree, fair value is specific to the entity and is the price to acquire an asset or assume a liability.
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Danica
11 months ago
I think the correct statements are I & II.
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Alease
12 months ago
I think the correct answer is B) I & IV. Fair value is specific to the entity, and the price in the principal market is the fair value measurement.
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Lizbeth
1 year ago
I'm not sure about statement III, fair value includes transportation costs but not transaction costs.
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Rosalyn
1 year ago
I agree with Fatima, fair value is specific to the entity and the price to acquire an asset.
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Fatima
1 year ago
I think the correct statements are I & II.
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