All of the following are the general principles underlying the valuation of liabilities except:
A) Liabilities requiring future cash payments appear at the present value of the required future cash flows discounted at an interest rate that reflects the uncertainty that the firm will be able to make the cash payments.
B) The fair value of a liability cannot differ from the amount appearing on the balance sheet, particularly for long-term debt.
C) Liabilities representing cash advances from customers appear at the amount of the cash advance.
D) Liabilities requiring the future delivery of goods or services appear at the estimated cost of those goods and services.

Question

Quizplus · Accepted Answer

The principle that fair value of a liability cannot differ from the amount on the balance sheet is incorrect. Fair value accounting requires the disclosure of fair values of certain categories of financial instruments, including liabilities, in the financial statements, even when those fair values differ from the carrying amounts on the balance sheet. The other principles listed are generally accepted principles underlying the valuation of liabilities.

All of the Following Are the General Principles Underlying the Valuation