AICPA Exam CPA-Financial 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.

AI & II

BI & IV

CII & III

DIII & IV

Show Suggested 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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Erick

11 hours 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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Alease

2 days 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

6 days ago

I'm not sure about statement III, fair value includes transportation costs but not transaction costs.

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Rosalyn

16 days ago

I agree with Fatima, fair value is specific to the entity and the price to acquire an asset.

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Fatima

17 days ago

I think the correct statements are I & II.

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