How many methods of Asset Valuation are recognized by GAAP? Briefly describe each method of Asset...
Briefly describe each method of Asset Valuation.
Homework Answers
Asset valuation is a method of determining the market value of financial assets. Assets are valued using absolute value, relative value and option pricing models. Valuing of financial assets is done with one or more of these type of models:
- Absolute value models calculates present value of all expected future cash flows. These models depend on mathematics rather than price observation.
- Relative value model values price by observing the market prices of similar assets.
- Option pricing model are used for certain type of financial assets and are a complex working model. The most common option pricing model are Black Scholes model and lattice model.
- Fair Value is used in accordance with GAAP where it can be used in asset transactions between two parties. This is used for assets whose carrying value is based on mark to market valuation; fixed assets carried at historical costs are not valued at fair value.
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How
many methods of Asset Valuation are recognized by GAAP?
Briefly describe
each method of Asset...
Under GAAP, companies may apply various valuation methods in recording transactions and preparing financial statements, for...
Under GAAP, companies may apply various valuation methods in recording transactions and preparing financial statements, for example historical cost, fair market, replacement, depreciated or amortized cost, etc. For each basis in your discussion, cover its definition, describe in general terms when it is proper to use it, and critique the advantages and disadvantages of its use. Address the issue of why we should (or should not) use so many different valuation bases in GAAP. Is it accurate to claim that...
Under GAAP, companies may apply various valuation methods in recording transactions and preparing financial statements, for...
Under GAAP, companies may apply various valuation methods in recording transactions and preparing financial statements, for example historical cost, fair market, replacement, depreciated or amortized cost, etc. For each basis in your discussion, cover its definition, describe in general terms when it is proper to use it, and critique the advantages and disadvantages of its use. Address the issue of why we should (or should not) use so many different valuation bases in GAAP. Is it accurate to claim that...
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Under GAAP, companies may apply various valuation methods in recording transactions and preparing financial statements, for example historical cost, fair market, replacement, depreciated or amortized cost, etc. For each basis in your discussion, cover its definition, describe in general terms when it is proper to use it, and critique the advantages and disadvantages of its use. Address the issue of why we should (or should not) use so many different valuation bases in GAAP. Is it accurate to claim that...
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