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TRUE OR FALSE1. Earnings are measured on a cash basis rather than an accrual basis. (False) 2. The direct method of reporting cash flow statements is where major classes of gross cash receipts and gross cash payments are disclosed. (True) 3. Effective January 1, 2015, PAS 39 was superseded by PFRS 9...

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TRUE OR FALSE 1. Earnings are measured on a cash basis rather than an accrual basis. (False) 2. The direct method of reporting cash flow statements is where major classes of gross cash receipts and gross cash payments are disclosed. (True) 3. Effective January 1, 2015, PAS 39 was superseded by PFRS 9. (True) 4. Book Value refers to an “exit price” or market price under current market conditions at measurement date. (False; Fair Value) 5. Cost approach Focuses on converting future amounts into discounted cash flows. (False; Income Approach) 6. Legally permissible reflects any legal restrictions on the use of assets. (True) 7. Cost approach uses prices and relevant information for market transactions for identical and comparable asset and liability. (False; market approach) 8. The fair value shall be adjusted for transaction cost. (False; shall not) 9. Market Approach is another common method of valuation and is based on the concept that the actual value of a business lies in the ability to produce revenue, profit and eventually wealth in the future. (False; Earnings Approach) 10. Earnings Approach is behind the concept that the value of business can be determined by reference to reasonably comparable guideline companies for which transaction values are known. (False; Market Approach) 11. The idea behind the market approach is that the value of the business can be determined by reference to reasonably comparable guideline companies for which transaction values are known. (True) 12. Fair market value can decrease the company's asset value listed on its balance sheet. (FALSE; increase) 13. In terms of liquidity, a cost balance sheet could reveal more worth and better creditworthiness than the fair market value balance sheet. (FALSE; fair market value balance sheet) 14. Calibration has one objective. (False; two objectives) 15. In order to perform a fair value measurement, an entity needs to undertake an in-depth search of all possible markets to identify the principal market or, in the absence of a principal market, the most advantageous market. (False) 16. Changes in the fair value of derivative instruments used as fair value hedges will always exactly offset the change in the fair value of the asset, liability, or firm commitment being hedged. (False)

17. The asset, liability, or firm commitment hedged by a derivative instrument must be adjusted to fair value at the end of each fiscal period. (True) 18. Fair value does not apply to all assets. It is usually estimated for current assets that are held for resale such as marketable securities. (True) 19. Book value is the historical value of an asset on a company’s balance sheet. (True) 20. Book value is referred to as an estimate of the potential value of an asset. (False; Fair value) 21. IFRS 13:34 provides that a fair value measurement of a financial or nonfinancial liability or an entity's own equity instruments assumes it is transferred to a market participant at the measurement date, without settlement, extinguishment, or cancellation at the measurement date. (TRUE) 22. IFRS 13:24 provides that a fair value measurement assumes an orderly transaction between market participants at the measurement date under current market conditions. (FALSE; IFRS 13:15) 23. IFRS 13:24 provides that a fair value measurement assumes a transaction taking place in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market for the asset or liability. (TRUE) 24. Intrinsic value might or might not be the same as the fair market value. (True) 25. The fair market value is not calculated by taking the average of the highest and lowest selling prices of the day. (False) 26. The three valuation approaches are income approach, the control approach and the cost approach. (FALSE; MARKET APPROACH) 27. In practice, some owners are not wholly rational about the asset they own,and some assets are valuable for non-financial reasons. (TRUE) 28. In other cases, it may not be appropriate for a tribunal to depart from FMV and move towards equitable value as a basis for assessing damages. (FALSE; IT MAY BE APPROPRIATE) 29. Property appraisal is a thorough and detailed assessment performed by an independent professional appraiser. (True) 30. Comparative Market Analysis helps in determining the asking price for a home. (True) 31. There is no official way to determine Fair Market Value of properties in the Philippines. (True) 32. Fair market value is the price that an asset would sell for on the close market. (False) 33. Selling price refers to what it would cost to buy or build a similar property or asset. (False) 34. Comparative analysis is the most common method to calculate fair market

value. (True) 35. The market approach uses appraisal methods that consist of a review of the individual assets of the company. (False)

36. Historical cost is the transaction price or the acquisition price at which the asset was acquired, or transaction was done, while Fair value is the market price that an asset can fetch from the counterparty. (True) 37. Eminent domain is another area where fair market value is often not relevant, because the person losing his or her property is under compulsion. (True) 38. In assessing the fair market value, one of the basic methods is the book value and financial status of the company. (False) 39. Are worldwide tax authorities always ensuring that transactions are realized at fair market value, at least for tax purposes? (True) 40. Fair value fluctuates more than market value. (FALSE) 41. Market value is dependent on supply and demand in the market where the asset is bought and sold. (TRUE) 42. Fair value focuses on assets and liabilities because they are primarily subject to accounting measurement. (TRUE) 43. The carrying value generally reflects equity. (TRUE) 44. Fair value is the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the reporting date under current market conditions. (FALSE) 45. Both buyers and sellers are reasonably and equally knowledgeable about the asset under consideration. (TRUE) 46. Cooperative analysis is the most common method to calculate fair market value. (FALSE; comparative analysis). 47. Insurance companies also use FMV to determine the damage or compensation that has to be paid. (TRUE) 48. The total amount of stockholders equity reported on the balance sheet is intended to show the fair value market of the corporation. (False) 49. Land, building, equipment, inventories are examples of business expenses. (False) 50. Fair Value Hierarchy : GAAP provides a hierarchy of information sources that range from Level 1 (best) to Level 5 (worst). (False; Wrong Word : 5 Correct Answer : 3) 51. The resulting change in fair value that re-measured periodically has an impact on net income. (True)

52. Fair value is defined as the price at which a business would change hands between a willing buyer and willing seller. (False) 53. Book Value is an accounting concept used to compute the difference between a company's total assets and total equities. (False) 54. Fair market value is the statutory standard of value. (False) 55. Entry Price is the price paid to acquire an asset or received to assume a liability in an exchange transaction. (True) 56. Fair value is an enter price in the principal market and it is the price that would be received to sell an asset or paid to transfer a liability. (False; Exit Price) 57. Generally accepted accounting principles (GAAP) require the use of fair value accounting for all assets and liabilities. (False) 58. Fair value is the market price that would be received if an investment were sold. (True) 59. Cost Method is an appropriate method for accounting for small stock investments. (True) 60. Amortized Cost is the value assigned to held-to-maturity securities. (True) 61. Fair value refers to an "exit price" or market price under current market conditions at measurement date. (True) 62. Income approach relies on the current replacement cost to replace the asset with a comparable asset. (False) 63. Fair market value refers to the price at which both transacting parties have agreed to independently. (True) 64. The fair market value of the property is then a fair valuation, or an assessment of its worth. (True) 65. The fair market value of an immovable property shall be higher of its cost of acquisition. (True) 66. In operation, it refers to an asset's sale price arranged by a willing buyer and seller, assuming both parties are knowledgeable and enter the transaction freely. (False) 67. Fair value represents the potential price, or the worth assigned, to an honest or service, taking under consideration its utility, supply and demand for it, and also the amount of competition for it. (True) 68. The owner capital is used to designate the amount by which current assets exceed current liabilities. (False; Working Capital) 69. Earnings are measured on an accrual basis rather than cash basis. (True) 70. Fair market value is similar to market value and appraised value (False; different) 71. The fair market value is the price an asset would sell for on the open

market when certain conditions are met. (True) 72. Fair value fluctuates more than Market value. (False) 73. Market approach is a method of determining the value of an asset based on the selling price of different assets. (False) 74. One of the costs of providing information is the costs associated with danger of litigation. (True) 75. One format of income statement is the multiple-step format. (True) 76. One of the disadvantages of market approach is not dependent on subjective forecasts. (False) 77. Being straightforward and involves simple computation is an advantage of market approach. (True) 78. The Precedent Transaction Method entails using valuation metrics from companies that have been traded publicly, which are considered to be rightly similar to the subject entity. (False) 79. The market approach is a method of determining the value of a capital based on the selling price of similar capital. (False) 80. Level 1 inputs are quoted prices in an inactive market for identical assets or liability. (False; should be active market) 81. Investment Value is the value to a specific buyer or investor often based on perceived synergies when the business is combined with another business. (True) 82. Fair value of an asset is the price that would be received to sell an asset in an orderly transaction between market participants. (True) 83. Fair-value accounting is also called as market(mark)-to-market accounting. (False) 84. Fair value provides more accuracy when it comes to current valuations from assets, liability and equity. (equity is not included) (False) 85. If fair values indicate a fall, possible losses will be reflected on the banks´ capital. (True) 86. Both parties must be free of any undue pressure to execute the transaction. (True) 87. A reasonable amount of money must be available to execute the transaction. (False; amount of time) 88. Only buyers are seeking to further their best respective financial interests and are not under pressure to act. (False) 89. The fair market value is calculated by taking the average of the highest and lowest selling prices of the day. (True) 90. Market value is an opinion of the most probable buy-sell price. (True) 91. Fair market value is a general type of market value. (False)

92. The fair market value of non-publicly traded stock is more complex.(True) 93.An active market is a market in which transactions for the asset or liability take place with sufficient regularity and volume to provide pricing information on an ongoing basis.(TRUE) 94.A principal market is the market with the greatest volume and level of activity for the asset or liability.(TRUE) 95 Market approach is another common method of valuation and is based on the concept that the actual value of a business lies in the ability to producer venue, profit and eventually wealth in the future.(FALSE,EARNING APPROACH) 96 Under fair value hedge accounting, the derivative must be recorded at fair value with changes in fair value presented in the same income statement line item as the earnings effect of the hedged item.(TRUE) 97 There is less of an opportunity to manipulate accounting data using the fair value approach.(TRUE)

MULTIPLE CHOICE 1. The following are several costs of providing accounting information except: a. costs of auditing b. costs associated with dangers of litigation and loss of competitive advantage c. costs of sale d. costs collecting, processing, and disseminating 2. The first step of profit measurement on the multiple-step income statement and is a key analytical tool in assessing a firm’s operating performance. a. Cost of Goods Sold b. Gross Profit c. Operating Profit d. Other Income 3. Which of the following is not a valuation method technique used in fair value measurement? a. Income Approach b. Residual Value Approach c. Market approach d. Cost approach 4. The fair value of an asset should be based upon a. The price paid to acquire the asset b. The price that would be received to sell the asset at the measurement date c. The price paid to transfer or sell the asset d. The carrying amount of the asset acquired 5. What method can an earning approach use? a. Empirical/Statistical b. Discounted future earnings c. Heuristics d. Cost 6. How many methods does the market approach have? a. 1 b. 4 c. 3 d. 2 7. Empirical/Statistical approaches composed of how many methods? a. 1 b. 2 c. 3

d. 4 8. ______ is another common method of valuation and is based on the concept that the actual value of a business lies in the ability to produce revenue, profit and eventually wealth in the future. a. Cost Approach b. Income Approach c. Market Approach d. Earning Approach 9. Focuses on converting future amounts into discounted cash flows. a. Market approach b. Income approach c. Cost approach d. Earning Approach 10. The idea behind this valuation approach is that the value of the business can be determined by reference to reasonably comparable guideline companies for which transaction values are known. a. Market Approach b. Comparable transactions Approach c. Earnings Approach d. Pricing Multiple Approach 11. This uses expert opinions of professional practitioners. a. Empirical Approach b. Heuristic Pricing Model c. Statistical Approach d. Relative Valuation Approach 12. It reflects any legal restrictions on the use of assets. a. Legally permissible b. Physically possible c. Highest and best use d. Financially feasible 13. It reflects the physical characteristics of an asset. a. Legally permissible b. Physically possible c. Highest and best use d. Financially feasible 14. In determining the fair value of an asset or a liability, an entity may refer to information that… a. is indirectly observable or readily available b. is directly observable or readily unavailable c. is indirectly observable or readily unavailable d. is directly observable or readily available

15. EBITDA means ... a. earnings before income, taxes, depreciation, and amortization b. earnings before interest, taxes, depreciation, and accounting c. earnings before interest, taxes, depreciation, and amortization d. earnings before interest, t-accounts, depreciation, and amortization 16. What is the 1st objective of Calibration? a. it determines the traceability of the measurement. In practice, calibration also includes repair of the device if it is out of calibration. b. used in the valuation model such that at the transaction date c. It is best practice to use the transaction price d. it checks the accuracy of the instrument. 17. The book value of an asset is equal to the a. asset's fair value less its historical cost. b. blue book value relied on by secondary markets. c. replacement cost of the asset. d. asset's cost less accumulated depreciation. 18. The definition of fair value focuses on __________ because they are a primary subject of accounting measurement. a. Assets and liabilities b. Rights and obligations c. Observable and unobservable inputs d. Entry price and exit price 19. Its concept arises from the practice of recording the assets on the balance sheet at its historical cost. a. Financial statement b. Book value c. Income statement d. Fair value 20. It is the estimated worth of a company's assets and liabilities that are listed on a company's financial statement. a. Book value b. Income statement c. Fair value d. Balance sheet 21. The ____________reflects non-performance risk (the risk the entity will not fulfil an obligation), including an entity's own credit risk and assuming the same nonperformance risk before and after the transfer of the liability [IFRS 13:42] a. fair value of an asset b. fair value of a liability c. fair value of non-financial asset d. fair value of non-financial liability

22. An optional exception applies for certain _____________and financial liabilities with offsetting positions in market risks or counterparty credit risk, provided conditions are met (additional disclosure is required). [IFRS 13:48, IFRS 13:96] a. financial assets b. financial instruments c. non-financial assets d. non-financial liabilities 23. It is a measure of what an asset is worth. This measure is arrived at by means of an objective calculation or complex financial model, rather than using the currently trading market price of that asset. a. Book Value b. Fair Value c. Depreciation d. Intrinsic Value 24. Seeking to further their best respective financial interests and are not under pressure to act. a. Buyers b. Sellers c. Buyers and Sellers d. None of the above 25. It is an opinion of the most probable buy-sell price. It reflects the probable amount of money a buyer would pay and a seller would accept for an item of property under specific conditions. a. Imposed Value b. Fair Market Value c. Market value d. Discount 26. All three approaches rely on two fundamental principles: a. that the owner of an asset has no special reason to want to own the asset apart from its ability to generate a return, b. that the owner is not impartial about the assets if they are all capable of generating the same expected income with the same likelihood. a. b. c. d.

Statement A only Statement A and B Statement B only None of the above

27. The most common circumstances when a tribunal may be required to decide the FMV of an asset are: I. when a party has been deprived of an asset (for example, an expropriation) – the damage may be measured as the FMV of the lost asset; II. when an asset has not been harmed – the damage may be measured as the FMV of the undamaged asset less the FMV of the damaged asset; and III. when a party has been misled (caused, for example, by a breach of warranty) – the damage may be measured as the difference between the FMV of the asset in the condition promised and its actual FMV. a. Statement I only b. Statement I and II only c. Statement I and III only d. Statement I, II, III 28. Which of the following is NOT a Fair Market Value Condition? a. No pressure to make the trade b. The transaction is not too rushed c. Trade serves best interest of both parties d. One party know the relevant facts 29. Which of the following usually prepares the Comparative Market Analysis? a. Appraiser b. Real estate professionals c. Accountant d. Financial advisor 30. It refers to the price at which one can purchase an asset under normal market conditions. a. Replacement Cost b. Selling Price c. Fair Market Value d. Sunk Cost 31. Uses estimated future cash flows or earnings, adjusted by a discount rate that represents the time value of money and the risk of cash flows not being achieved, to derive a discounted present value. a. Market approach b. Income approach c. Cost approach. 32. Uses the prices associated with actual market transactions for similar or identical assets and liabilities to derive a fair value. a. Market approach b. Income approach c. Cost approach 33. Uses the estimated cost to replace an asset, adjusted for the obsolescence of

the existing asset. a. Market approach b. Income approach c. Cost approach. 34. Which of the following is an effective way for estimating the fair value mar...