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1. Is it true that all the balances of assets, liabilities and equity in SOFP are actually book values?
2. Is it true that ALL assets in SOFP are recorded at their carrying values while ALL the liabilities and equity are recorded at their respective book values?
3. Is it also true that the real value of assets and liabilities are whatever their fair values are in the market?
4. Whilst the true value of equity is determined by their market values?
5. The market value of equity items will determine the actual worth of the business in the market, is that correct?
Thank You!
1. Yes – they are values recorded in the books of account and are therefore called book values.
2. The book values are the carrying values – it means the same thing.
3. Yes
4. Yes
5. Yes
Which ACCA exam are you actually studying for? You have posted questions about many different ACCA exams in the past.
Thanks for that. I am studying F7 currently but whenever i get any problem i ask you guys in respective forum!
1. Little clarification needed. When you say that the true value of an asset or a liability is actually their fair values then in the case of the assets the value of assets is increased or decreased based on its condition at the time of sale but how that works with a liability?
2. When the fair value of the assets increase then we record this gain in the statement of other comprehensive income but when do we record the revaluation surplus in the SOFP?
3. Is there a difference between fair values and market values?
4. Is it true that in case of liquidation we calculate the fair values of total assets and total liabilities respectively which refers to the price of asset agreed between buyer and seller?
5. But the equity worth is determined by its market values (not fair value) which refers to the price of equity items of a business de by the stock exchange?
6. Do we study in any ACCA paper about the factors that decide the market value of a business based on the balance of its total equity items?
Thanks again ?
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