CIMA Exam CIMAPRA19-F03-1 Topic 3 Question 46 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 46
Topic #: 3

Company H is considering thevaluation of an unlistedcompany which it hopes to acquire.

It has obtained thetarget company's financial statements.

Company Hhas been advised that the book value of net assets asshown inthe financial statementsof the target companydoes not provide a reliable indicator of their truevalue.

Advise the Board of Directors which of the following THREE statements aredisadvantagesof the net asset basis of valuation?

AThe net book value of assetsis merely a record of past transactions which complies with accounting conventions.

BThe net book value of assets can be obtained from the financial statements.

CIntangible assets are often notshown in the company's financial statements.

DThe net realisable value is usually differentfrom the net book value shown in the financial statements.

EThe net book value of current assets is normally a reliable indicator of their realisable value.

Show Suggested Answer

Suggested Answer: A, C, D

by Serina at May 08, 2022, 09:55 AM

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