Asked by kirston seldon on Jul 26, 2024
Verified
The following assumptions are made when measuring the fair value of an equity instrument except for:
A) The market participant transferee will take on the rights and responsibilities associated with the instrument.
B) An entity's own equity instrument would remain outstanding.
C) The instrument would not be cancelled or otherwise extinguished on the measurement date.
D) An entity's own equity instruments are transferred to a market participant at transfer date.
Equity Instrument
A type of financial security that signifies ownership in a company and represents a claim on part of the company's assets and earnings, such as stocks.
Market Participant
An entity or individual with the willingness and ability to buy, sell, or otherwise engage in transactions in a market.
- Comprehend the fundamental rules that govern the assessment of fair value.
Verified Answer
PB
Prashant BhoyarJul 27, 2024
Final Answer :
D
Explanation :
The other three assumptions are relevant to measuring fair value of an equity instrument, but an entity's own equity instruments transferring to a market participant is not an assumption. It is not typical for an entity to transfer its own equity instruments.
Learning Objectives
- Comprehend the fundamental rules that govern the assessment of fair value.