Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 5 - Balance Sheet and Statement of Cash Flows - Review and Practice - Questions - Page 238: 17


a. Trade accounts receivable- they should be stated in relevance to their estimated amount collectable which is often referred to as the realizable value. The method that is generally followed is such valuation is that of deducting from the total accounts receivable that is the amount of the allowance for doubtful debts accounts. b. Land- its normally stated on the balance sheet at cost. c. Inventories- are stated at the lower-of-cost-or-net realized value; that is if the LIFO criterion or retail inventory method are used instead of the net realizable value. d. Trading securities (common stock of other companies)- are normally stated at fair value. e. Prepaid expenses- should be stated at cost, less the amount apportioned to and written off over the previous accounting periods.

Work Step by Step

Balance sheet valuation is normal the process of using valuation methods to determine a company's value by estimating the value of its assets and the methods used believe that a company's value lies basically in its balance sheet.
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