All of the following are disadvantages of fair value use except:
A) fair values may not be readily obtainable.
B) fair values may cause more fluctuations as change occurs from period to period.
C) comparability between companies may be impacted by different fair value measurement.
D) fair values can only be used on balance sheet accounts.
D
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The face value of a bond is $71,000, its stated rate is 7%, and the term of the bond is five years
The bond pays interest semiannually. At the time of issue, the market rate is 8%. Determine the present value of the bonds at issuance. Present value of $1: 4% 5% 6% 7% 8% 5 0.822 0.784 0.747 0.713 0.681 6 0.790 0.746 0.705 0.666 0.630 7 0.760 0.711 0.665 0.623 0.583 8 0.731 0.677 0.627 0.582 0.540 9 0.703 0.645 0.592 0.544 0.500 10 0.676 0.614 0.558 0.508 0.463 Present value of annuity of $1: 4% 5% 6% 7% 8% 5 4.452 4.329 4.212 4.100 3.993 6 5.242 5.076 4.917 4.767 4.623 7 6.002 5.786 5.582 5.389 5.206 8 6.733 6.463 6.210 5.971 5.747 9 7.435 7.108 6.802 6.515 6.247 10 8.111 7.722 7.360 7.024 6.710 A) $50,844 B) $20,156 C) $68,152 D) $71,000
In terms of marketing expenditures, service companies tend to spend more on which of the following than manufacturers?
A) media advertising B) trade promotions C) consumer promotions D) direct marketing