1. The use of fair value in accounting measures for US GAAP and IFRS can be attributed to which of the following:

a. The financial fraud crisis that arose in the early 2000s.

b. The increased use of fair value measures by management to evaluate operations.

c. The changing nature of business from cost-based manufacturing assets and liabilities to more market-oriented assets and liabilities, such as software companies and technology companies.

d. The development of worldwide financial institutions that trade financial assets and liabilities twenty-four hours a day and seven days a week.

e. All of the above.

2. The purpose of ASC 820 and IFRS 13, Fair Value Measurement, is to specify when fair value is to be used in accounting and how it is to be applied.

a. True

b. False

3. Which of the following best describes the definition of fair value? a. Initial purchase price b. Current fair value adjusted for managements intentions c. Exit price d. The amount a willing buyer and willing seller agree to as a price given a reasonable period of time

4. ASC 820 and IFRS 13 establish a framework with which to apply fair value measures to assets and liabilities for financial reporting purposes. Which of the following are not included in that framework? a. Valuation premise b. Market participant assumptions c. Unit of account d. Valuation costs

5. The highest and best use valuation concept means which of the following? a. The asset or liability holder determines the highest and best use of the asset b. The highest and best use is established solely by the potential purchaser once identified by the seller c. Valuation based upon the use of the asset by market participants that would maximize the benefit or value to market participants d. Given the passage of a reasonable period of time (one to two years), the value of an asset can be determined by the holder of the asset

6. When considering an exit price, what is the best description for a principal market? a. The market in which the entitys common stock is listed and traded b. The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity c. The market that the most experienced broker/dealer for the specific asset or liability would use to sell the asset or transfer the liability d. The market in which the entity believes that, after a reasonable period of time, it can receive the highest amount for the asset or the highest amount to transfer the liability

7. When considering if there has been a significant decrease in the volume and level of activity for a specific asset or liability, in relation to normal market activity, what else should be considered to evaluate market activity?

a. Number of recent transactions b. Range of bid/ask spread c. Age of quoted prices d. Overall volume of market activity for the market being considered

e. b., c. and d.

f. a., b., and c.

8. Why are orderly markets important in the definition of fair value?

9. Identify two characteristics that distinguish market participants when determining fair value?

10. What are the primary valuation techniques identified in ASC 820 and IFRS 13? a. Composite national average asset/liability approach, average fair value approach and discounted cash flow approach b. BS & C Index, Case-Shriller Fair Value Index and cost approach c. Market approach, income approach and cost approach d. Matrix indexed approach, replacement value approach and comparable average market approach

11. What is meant by the term valuation inputs? a. The actual overall process used by the entity to estimate fair value for an asset or liability b. Data entered into a pricing model c. Assumptions used by market participants to price an asset or liability d. Observable market prices that are comparable to the asset or liability being measured at fair value