The preferred method of determining fair value of transactions is
A) Market-based values.
B) Basing them on reasonable management assumptions.
C) External auditor estimates.
D) Detailed computations by outside experts.

Question

Quizplus · Accepted Answer

Market-based values are the preferred method of determining fair value of transactions as they are objective, reliable, and based on actual market conditions. This method uses prices of similar assets or liabilities that are traded in an active market, providing a more accurate valuation. Basing fair value on reasonable management assumptions, external auditor estimates, or detailed computations by outside experts may lack objectivity and could potentially be biased.

The Preferred Method of Determining Fair Value of Transactions Is