Growth Corp. ,a publicly accountable entity,purchased a company with the following assets and liabilities for $100,000:

Which of the following is not correct about the difference between carrying value and fair value?

Question

Growth Corp. ,a publicly accountable entity,purchased a company with the following assets and liabilities for $100,000:

Which of the following is not correct about the difference between carrying value and fair value?

Quizplus · Accepted Answer

Inventories could have a lower fair value due to obsolescence or other factors that reduce their utility or attractiveness, but they should not be affected by accounting errors. The difference between carrying value and fair value reflects changes in asset or liability values that have tangible economic consequences, not errors in financial reporting. Therefore, option D is not correct. Options A, B, and C are plausible explanations for differences between carrying value and fair value, depending on the specific circumstances of the assets and liabilities involved.