CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

The book value of an asset is designed to closely approximate its market value. True or False?
Correct Answer: False

The book value of an asset is acquisition cost minus accumulated depreciation. The accumulated depreciation measures the portion of the asset's acquisition cost allocated to previous periods, reflecting its use. The market value is what a seller would be willing to pay for the asset.

User Contributed Comments 3

User Comment
cong Discern the differences between BV, NRV, MV.
johntan1979 Book value is more rigid and declines over time, whereas market value is subject to the whims of irrational market participants.
houstcarr well at one point in time the historical cost / book value was the market value, so with your logic that value isn't rational either
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