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Course 171039- Fair Value Accounting
  Final Exam
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171039v - Fair Value Accounting

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5 CPE Credit Hours

Final Exam
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Read 'Chapter 0: Course Material' & answer the following question(s):
1. Measuring the impairment loss on a long-lived asset (asset group) to be held and used requires a determination of its fair value. This fair value may in appropriate circumstances be based on: I) The sum of the individual fair values of the assets and liabilities of the asset group; II) The prices of similar assets or groups; or III) Present value estimates
2. According to SFAC 7, Using Cash Flow Information and Present Value in Accounting Measurements, the objective of present value is to estimate fair value when used to determine accounting measurements for
3. Which of the following is NOT a necessary element of present value measurement?
4. An interest method of allocation is most likely relevant when: I) The transaction giving rise to the asset or liability is viewed as a borrowing and a lending; II) Similar assets or liabilities are allocated using an interest method; III) The initial measurement was at present value; IV) The asset or liability has closely related estimated cash flows.
5. The fair value option is NOT allowed for
6. Upfront costs and fees applicable to items for which the fair value option is selected are
7. Which one of the following is true?
8. Disclosures of fair value are required in ________________ financial statements.
9. Amount of cash into which an asset is expected to be converted in due course of business less direct costs, if any, necessary to make that conversion is called.
10. Which of the following statement is NOT true?
11. ______________________ is NOT considered a pragmatic approach to common stock valuation.
12. John Watson's uncle recently passed away, and included in the property that he inherited is a bond that pays an 8% coupon, has a face value of $1,000, has 10 years to maturity, and the investors require a rate of return of 10%. Assuming annual coupon payments, what is the value of the bond?
13. Calculate the capitalization rate for the following investment: Net operating income (NOI) = $18,750; Purchase price = $150,000; and Equity = 20%
14. ___________________________ is a mathematical method used primarily to value debt securities without solely relying on quoted prices for the particular securities.
15. The present value of $110,000 expected to be received one year from today at an interest rate (discount rate) of 10% per year is which of the following values? (Note: the present value of $1 at 10% for one period is 0.909)
16. Purchase price divided by net operating income is
17. There is a 20% probability that future cash flows will be $100, a 50% probability that they will be $200, and a 30% probability that they will be $300. What is the expected cash flow?
18. FASB’s ______________________ uses a range of cash flows along with their probabilities of occurrence.
19. The FASB takes the position that after computing the expected cash flows, a company should discount those cash flows by the ______________.
20. Nonperformance risks do NOT include:
21. Which one of the following is NOT a lattice model?
22. ASC 718-10-05 (FAS-123R, Share-Based Payment)
23. A reconciliation of the beginning and ending balances is required for any assets or liabilities measured at fair value
24. With items reported at fair value on a nonrecurring basis, it is unlikely that _________ inputs will be available.
25. Which of the following is NOT an asset that is measured at face value on a recurring basis?
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