When measuring the fair value of a liability,which of the following is assumed?
A)the liability is settled by the holder
B)the liability will be settled by the market participant
C)the liability will not be settled
D)the liability is settled with the counterparty on measurement date

Question

Quizplus · Accepted Answer

When measuring the fair value of a liability, it is assumed that the liability will be settled by the market participant rather than the holder or counterparty. This is because the fair value is based on the price that would be received to sell the liability in a current transaction between market participants, rather than based on the holder's or counterparty's individual circumstances.

When Measuring the Fair Value of a Liability,which of the Following