Asset Management Asset Valuation and Financial Reporting 2

Question 1

Which valuation approach values an asset by comparing it to similar recently sold assets in the marketplace?

Accepted Answer

Market Approach

Answer

The market approach derives asset value from observable prices of comparable assets traded in active markets.

Question 2

Under IFRS (as adopted in cross-border US reporting), the revaluation model allows fixed assets to be carried at:

Accepted Answer

Fair value less subsequent accumulated depreciation

Answer

The IFRS revaluation model permits assets to be remeasured to fair value with changes recorded in other comprehensive income.

Question 3

What does the capital expenditure (CapEx) ratio measure in asset management financial analysis?

Accepted Answer

Investment in fixed assets relative to depreciation

Answer

The CapEx ratio compares capital spending to depreciation to indicate whether a company is maintaining or growing its asset base.

Question 4

Which US federal tax depreciation system is most commonly used for tangible business property placed in service after 1986?

Accepted Answer

MACRS

Answer

The Modified Accelerated Cost Recovery System (MACRS) is the standard US tax depreciation method allowing faster early-year deductions.

Question 5

An asset's 'salvage value' is best defined as:

Accepted Answer

Estimated value at end of useful life

Answer

Salvage value (residual value) is the estimated amount an asset will fetch at disposal after its useful life ends.

Asset Management Practice Test