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1

Fair Value is

a market based measurement, not an entity specific measurement. Should consider attributes of specific liability or asset being measured

2

Fair value price should not be adjusted for:

Transaction costs but adjusted fro Transportation costs

3

Fair Value does not apply to:

share based transactions
lease clarification
exceptions to fair market value

4

the transaction price might not be fair value if:

the transaction is between related parties
seller is under duress
unit of account for the rransaction price is different than what the company would measure
market in which the trnsaction takes place is different from the principal market

5

Difference between transaction price(entry) and recorded fair value price (exit) would:

be recognized as a loss or gain in the period of intial recognition

6

MArket approach (fair value):

uses prices and other relevant information generated by markets

7

income approach(fair value):

converts future amounts to a single present amount. discounting future cash flows

8

Cost Approach(Fair value):

amount that currently would be required to replace the service capacity of an asset

9

gains and losses resulting from changes in fair value will be reported in:

current income

10

NO fair value measurement for:

investment in a subsidiary that is to be consolidated, interest in a variable interest entity, employer plans and obliation for pension benefits etc., lease accounting, demand deposit liabilities of financial institutions, financial instruments that are clasified by the issuer as a component of shareholders equity

11

INPUTS for fair value may be either:

observable
unobservable

12

Level 1 (fair value):

inputs are unadjusted quoted prices in active markets for assets or liabilities identical to those being valued for the entity

13

Level 2 (fair value):

inputs are observable for assets or liabilities either directly or indirecty other than quoted prices

14

Level 3 (fair value):

inputs are unobservable for assets/liabilities should be used to determine fair value only to the extent observable inputs are not available

15

in periods subsequent to initial recognition the reporting entity must disclose the following information in the statement of financial position:

fair alue measurements at the reporting date
segregated into the 3 levels
transfers from one lvevel to another
for levels 2&3 a description of the valuation technique
level 3 a rewconciliation of the beg and end balances

16

fair value option disclosures objectives:

1. disclosures are intended to faciliatate comparisons
to achieve these objectives and outcomes, required disclosures must be provided in both interim and annual financial statements

17

Required disclosures for interim and annual financial position

reason for electing fair value
desciption of those similar items and the reasons for partial election