Both IFRS and U.S. GAAP permit valuation of long-term debt and other liabilities at
A) present value discounted at the firm's cost of capital.
B) current market values of the obligations, based on changes in the discount rate with unrealized gains and losses reflected in a separate account in stockholders' equity.
C) fair value with gains and losses on changes in fair value recorded in income in certain situations.
D) historic costs without reflecting changes in valuation as obligations will be retired at their maturity date.

Question

Quizplus · Accepted Answer

Both IFRS and U.S. GAAP allow for the valuation of long-term debt and other liabilities at fair value, with gains and losses recorded in income in certain situations. This method reflects the current market value of the obligations and provides more updated information to investors and stakeholders. Valuing the liabilities at historic cost (option D) may not accurately reflect their current value, while options A and B may not always capture changes in fair value.