Assets acquired under multi-year deferred payment contracts are:
A)Valued at their fair value on the date of the final payment.
B)Valued at the present value of the payments required by the contract.
C)Valued at the sum of the payments required by the contract.
D)None of these.

Question

Quizplus · Accepted Answer

Assets acquired under multi-year deferred payment contracts should be valued at the present value of the payments required by the contract, which takes into consideration the time value of money. This reflects a more accurate value of the assets compared to just summing up the payments or valuing it at fair value on the final payment date.

Assets Acquired Under Multi-Year Deferred Payment Contracts Are