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AICPA CPA-Financial Exam - Topic 2 Question 82 Discussion

There are multiple active markets for a financial asset with different observable market prices:There is no principal market for the financial asset. What is the fair value of the asset?
C) $74
A) $71
B) $72
D) $76

AICPA CPA-Financial Exam - Topic 2 Question 82 Discussion

Actual exam question for AICPA's CPA-Financial exam
Question #: 82
Topic #: 2
[All CPA-Financial Questions]

There are multiple active markets for a financial asset with different observable market prices:

There is no principal market for the financial asset. What is the fair value of the asset?

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 Sharen at Mar 05, 2024, 01:58 PM

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Ellsworth
7 months ago
Fair value should reflect the most common price, so $72 makes sense.
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Kirk
8 months ago
$71 is too low, I’d go with $76 for a safer bet.
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Brock
8 months ago
Surprised there's no principal market for this asset! How does that work?
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Golda
8 months ago
I disagree, $74 seems more accurate considering the highest activity.
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Vannessa
8 months ago
I think the fair value is $72 based on the average prices.
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Shawnda
9 months ago
I think we learned that when there's no principal market, we should consider the most active market. I’m leaning towards $74, but I’m not completely confident.
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Juan
9 months ago
I feel like the fair value should reflect the most advantageous price, but I can't recall if that means we should pick the lowest or the highest price from the options.
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Bettina
9 months ago
This question seems similar to one we practiced where we had to choose the most representative price in the absence of a principal market. I think it might be the highest price?
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Jutta
9 months ago
I remember we discussed how to determine fair value when there are multiple prices, but I'm not sure if we should take the average or the lowest price.
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Vincenza
9 months ago
Alright, I've got this. Since there's no principal market, I'll need to consider the different observable prices and figure out the most representative fair value. Probably a matter of analyzing the market activity and volume to decide which price to use.
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Sabrina
9 months ago
Ah, I see. This is about determining fair value when there's no principal market. I remember learning about that in class. I'll need to think through the different approaches and decide which one makes the most sense based on the details given.
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Keva
9 months ago
I think the key here is to understand the concept of fair value when there's no principal market. I'll need to review the guidance on how to determine fair value in that situation and apply it to the information provided.
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Denny
9 months ago
Okay, let's see. The question says there are multiple active markets, so I'm guessing I need to look at the different prices and somehow come up with a fair value. Not sure how to do that exactly, but I'll give it a shot.
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Joesph
9 months ago
Hmm, this is a tricky one. Since there's no principal market, I'll need to consider the different observable market prices and figure out the most representative fair value.
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Ma
9 months ago
I've got a good feeling about this. I remember learning about Automation script settings in class, and I think defining outputs and correlating to incident types are the two capabilities they include.
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Francoise
9 months ago
Wait, I'm not sure about this. Is it "fixed costs" or "variable costs"? I need to think this through more carefully.
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Carin
10 months ago
Hmm, I'm a bit unsure about this one. I know there are a few different commands for managing kernel modules, but I can't quite remember the differences between them. I'll have to think this through carefully.
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Flo
1 year ago
Wait, are we talking about financial assets or the latest sneaker drop? Because if it's the latter, I'm pretty sure the fair value is whatever the resellers say it is. *wink wink*
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Darci
1 year ago
C) $74
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Annice
1 year ago
B) $72
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Genevieve
1 year ago
A) $71
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Shenika
1 year ago
Hold up, is this a trick question? What if the 'fair value' is actually the price of a rare collectible version of this asset - $71. I'm going with A).
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Goldie
1 year ago
User4: I'll go with D) $76 just to mix it up.
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Marge
1 year ago
User3: I think it's C) $74 because it seems like a fair price to me.
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Muriel
1 year ago
User2: I'm not sure, but I'll go with B) $72 just to be safe.
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Gene
1 year ago
User1: I think it's a trick question too. I'm going with A) $71.
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Earnestine
1 year ago
Aha, the key here is 'fair value.' Gotta go with the most reasonable price, not the highest one. B) $72 seems like the way to go.
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Tequila
1 year ago
Yeah, I think B) $72 is the fair value in this case.
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Richelle
1 year ago
I agree, B) $72 seems like the most reasonable choice.
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Paola
1 year ago
Hmm, the question says there are multiple active markets, so I'm thinking the most representative price would be the average. That's C) $74.
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Whitley
1 year ago
If there's no principal market, I'd go with the highest observable price - that's D) $76. Gotta maximize that fair value, am I right?
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James
1 year ago
I see your point, but I think it's always better to be cautious. I would go with C) $74 just to be on the safe side.
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Ozell
1 year ago
That's a good point, but I still think maximizing fair value is important. D) $76 might be the safer choice in this case.
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Leanora
1 year ago
But what if the highest observable price is an outlier? Wouldn't it make more sense to go with a more conservative option like C) $74?
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Malcolm
1 year ago
I think you're right, going with the highest observable price makes sense. D) $76 seems like the way to go.
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Ariel
1 year ago
I disagree, I think the fair value should be the average of all market prices, which would be $73.50.
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Evelynn
1 year ago
I agree with Kathrine, so the fair value would be $76.
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Kathrine
1 year ago
I think the fair value should be the highest market price.
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