Which of the following should the client have as part of its process for estimating fair value?
A)A systematic process to identify each asset that is subject to realizable value estimation.
B)A process to identify relevant historical values.
C)An analysis of transactions that have taken place within the client's organization.
D)A realistic process to estimate future cash flows to discount back to a present value.

Question

Quizplus · Accepted Answer

A realistic process to estimate future cash flows to discount back to a present value is essential for estimating fair value. This is because fair value is the estimated price at which an asset or liability should exchange in a current transaction between knowledgeable and willing parties, and it should reflect the future economic benefits or obligations that the asset or liability represents. The other choices may be part of the process, but by themselves are not sufficient for estimating fair value.

Which of the Following Should the Client Have as Part