Did the subprime crisis of 2008 illustrates the issue of the inability to correctly report which...

Did the subprime crisis of 2008 illustrates the issue of the inability to correctly report which of the following cost priniciple?

A) fair value

B) replacement cost

C) long-term cash obligation

Expert Solution

Did the subprime crisis of 2008 illustrates the issue of the inability to correctly report which of the following cost priniciple ?

Answer : A. Fair Value

Reason: Fair value proponents argue that historical costs of assets on a company’s balance sheet often bear little relation to their current value. Under historical cost accounting rules, most assets are carried at their purchase price or original value, with minor adjustments for depreciation over their life (as in the case of buildings) or for appreciation until maturity (as in the case of a bond bought at a discount to par). A building owned by a company for decades, therefore, is likely to appear on the books at a much lower value than it would actually command in today’s market.

ekkarill92 answered 2 years ago

why securitisation was accused to be at the heart of the 2008 subprime crisis

Considering the impact of the Financial Crisis of 2008, the subsequent recession, and the inability of...

Considering the impact of the Financial Crisis of 2008, the subsequent recession, and the inability of the US government to agree on basic tenants of fiscal policy: What impact do these factors have on savings and investment practices in the US? Is it realistic to expect that tax reform would have the desired effect of increasing savings and encouraging investment as some advocates support?

Greedy investing in subprime mortgage securities caused the financial crisis of 2008. Explain why the first...

Greedy investing in subprime mortgage securities caused the financial crisis of 2008. Explain why the first sentence is true (or explain why you disagree if you think it is not true). How did subprime mortgages in the U.S. become a worldwide financial issue? Did any of you suffer as a result of the financial crisis of 2008 ( or your parents, if that is a more age appropriate question). I'll start: I tried to sell my house during the financial...

Which of these figures correctly illustrates the nature of the bonding of H2O?

Part AWhich of these figures correctly illustrates the nature of the bonding of H2O?Part BWhat type of bond joins the carbon atom to each of the hydrogen atoms?What type of bond joins the carbon atom to each of the hydrogen atoms?double (nonpolar) covalentsingle (nonpolar) covalentpolar covalentionichydrogen

how did the financial market 2008 crisis impact the banks?

Which diagram CORRECTLY illustrates the clustering of lipids in the formation of a micelle?

Which diagram CORRECTLY illustrates the clustering of lipids in the formation of a micelle? Select one: a. neither A nor B b. both A and B с. А d. B

Why did the 2007 U.S. subprime crisis spread rapidly? A. Banks in other countries failed to...

Why did the 2007 U.S. subprime crisis spread rapidly? A. Banks in other countries failed to measure the risk of real estate derivatives. B. The United States adopted the fixed exchange rate system. C. The Fed failed to act at the right time. D. The United States had a large current account surplus. E. There was speculation against the U.S. dollar.

Before the 2008 Financial Crisis, asset-backed commercial papers (ABCP) backed by subprime mortgages were a common...

Before the 2008 Financial Crisis, asset-backed commercial papers (ABCP) backed by subprime mortgages were a common source of liquidity for financial institutions. Describe the market forces and policy factors contributing to this development. (word count limit: 300)

11. What factors did bring about the financial crisis of 2008?

How did government respond to the crash of 1929 and the financial crisis of 2008

Question