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Course # 171039
Fair Value Accounting
based on the electronic .pdf file(s):

Fair Value Accounting
by: Delta CPE, 2014, 85 pages

5 CPE Credit Hours

A P E X C P E . C O M  . . . . .  1.877.317.9047  . . . . .  support@apexcpe.com

Chapter 0 - Course Material

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   
I and III only.
I and II only.
II and III only.
I, II, and III.
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   
Neither Initial-Recognition Purposes, nor Fresh-Start Purposes
Both Initial-Recognition Purposes and Fresh-Start Purposes
Initial-Recognition Purposes, but not Fresh-Start Purposes
Fresh-Start Purposes, but not Initial-Recognition Purposes
3.    Which of the following is NOT a necessary element of present value measurement?   
Estimates of future cash flows.
The price of uncertainty inherent in an asset or liability.
Liquidity or market imperfections.
Observed transaction prices.
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.   
I only.
I and II only.
I, II, and III only.
I, II, III, and IV.
5.    The fair value option is NOT allowed for   
An interest in a variable interest entity that the entity is required to consolidate.
Recognized financial assets and financial liabilities.
Written loan commitment.
Forward purchase contract.
6.    Upfront costs and fees applicable to items for which the fair value option is selected are   
Expensed as incurred.
7.    Which one of the following is true?   
The fair value option limits the presentation of an asset or liability to the long-term section of the balance sheet.
GAAP does not allow for the netting of carrying values and fair values on the balance sheet
Unrealized gains and losses on items measured using the fair value option are recognized at an election date.
Companies must classify cash receipts for items measured at fair value based on their nature.
8.    Disclosures of fair value are required in ________________ financial statements.   
Annual and interim.
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.   
Current replacement cost.
Fair value.
Net realizable value.
Net conversion value.
10.    Which of the following statement is NOT true?   
No substantial differences between U.S. GAAP and IRFS.
Both IFRS and U.S. GAAP offer a fair value option for financial assets and liabilities.
Both the FASB and the IFRS plan to have revised fair value standards finalized by 2011; the revised standards will be mutually consistent.
ASC 820 (FAS-159) does not require additional use of fair value beyond what is required in other statements.
11.    ______________________ is NOT considered a pragmatic approach to common stock valuation.   
P/E ratios.
Discounted cash flow analysis.
Price-sales (P/S) ratios.
Price-dividend ratios.
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.   
The expected cash flow model.
The present value model.
Matrix pricing.
Market multiples.
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   
Gross Income Multiplier.
Net Income Multiplier.
Capitalization rate.
Discounted cash flow.
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.   
Risk adjustment model.
Fair value model
Expected cash flow model.
Cost of capital model.
19.    The FASB takes the position that after computing the expected cash flows, a company should discount those cash flows by the ______________.   
Risk-free rate of return.
Risk-adjusted rate of return.
Pure rate of return.
Expected inflation rate.
20.    Nonperformance risks do NOT include:   
Collateral value risk.
Default risk.
Liquidity risk.
Credit risk.
21.    Which one of the following is NOT a lattice model?   
22.    ASC 718-10-05 (FAS-123R, Share-Based Payment)   
Prefers use of any one of two particular methods as the valuation techniques of choice.
Does not specify a preference for a particular valuation technique or model in estimating the fair value of employee share options and similar instruments.
Requires an entity to use the expected cash flows method as defined by Statement of Financial Accounting Concepts (SFAC) No. 7, Using Cash Flow Information and Present Value in Accounting.
Is an option valuation technique.
23.    A reconciliation of the beginning and ending balances is required for any assets or liabilities measured at fair value   
On a recurring basis that use Level 3 during the period.
On a nonrecurring basis that use Level 3 during the period.
On a recurring basis that use Level 2 during the period.
On a nonrecurring basis that use Level 1 during the period.
24.    With items reported at fair value on a nonrecurring basis, it is unlikely that _________ inputs will be available.   
Level 0
Level 3
Level 2
Level 1
25.    Which of the following is NOT an asset that is measured at face value on a recurring basis?   
Trading securities.
Impaired assets.
Available-for-sale securities.