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AICPA Exam CPA-Financial 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?

A$71

B$72

C$74

D$76

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 Sharen at Mar 05, 2024, 01:58 PM

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Flo

3 months 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

2 months ago

C) $74

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Annice

2 months ago

B) $72

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Genevieve

2 months ago

A) $71

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Shenika

3 months 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

2 months ago

User4: I'll go with D) $76 just to mix it up.

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Marge

2 months ago

User3: I think it's C) $74 because it seems like a fair price to me.

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Muriel

2 months ago

User2: I'm not sure, but I'll go with B) $72 just to be safe.

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Gene

3 months ago

User1: I think it's a trick question too. I'm going with A) $71.

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Earnestine

3 months 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

2 months ago

Yeah, I think B) $72 is the fair value in this case.

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Richelle

2 months ago

I agree, B) $72 seems like the most reasonable choice.

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Paola

3 months 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

3 months 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

2 months 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

3 months 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

3 months 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

3 months 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

3 months 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

3 months ago

I agree with Kathrine, so the fair value would be $76.

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Kathrine

3 months ago

I think the fair value should be the highest market price.

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