Ask Question
16 December, 09:40

Do you think that contracts or other financial instruments that do not have readily available market prices should be accounted for at fair value

+5
Answers (1)
  1. 16 December, 11:25
    0
    Fair value is defined as, a rational and unbiased estimate of the potential market price of a good, service, or asset. It takes into account such objective factors as: acquisition/production/distribution costs, replacement costs, or costs of close substitutes.

    Since this is an opinion question, either answering yes or no is correct, but you have to say why.

    If I understand the question correctly, and the question isn't missing any parts, I would assume it's asking if you should put value on contracts as a document and other financial instruments.

    I was going to say no, but because contracts can be transferred or used as currency, I would say yes.

    If you say yes I would argue that giving a fair value of the contracts would make them more legal and have more bearing in a place of business. That it would prevent the fluctuation of value on that contract based on other factors like profit/loss and whether or not you transferred, changed, etc. the contract. I would argue that to protect that contract and other financial instruments, and the holders stake in it, you should create a fair value for it.

    If you say no, I would argue that the contract can already be treated as a form of currency, and because of that it should not have a fair value placed on it. I would also argue that because contracts often times state the value of that contract within itself, that it should not have a fair value. And finally, I would argue that because with time, the value of items change, you should not place a fair value on a document that can be changed and can lose or gain value with time based on the purposed information in the contract.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Do you think that contracts or other financial instruments that do not have readily available market prices should be accounted for at fair ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers