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hfbamafan
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If the market value of a car was $6,000 exactly 3 years ago 08 May 2012, 22:28
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75% (hard)

Question Stats:

26% (01:26) correct 74% (01:21) wrong based on 31 sessions

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If the market value of a car was $6,000 exactly 3 years ago, what is its current market value?

(1) Starting at the time of purchase, the market value of the car depreciated by 20 percent of its purchase price per year.
(2) The current market value of a car manufactured in the same year is $2,400.

I am sorry, I do not agree with this answer reasoning following

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hfbamafan
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If the market value of a car was $6,000 exactly 3 years ago 08 May 2012, 22:35
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hfbamafan
If the market value of a car was $6,000 exactly 3 years ago, what is its current market value?

(1) Starting at the time of purchase, the market value of the car depreciated by 20 percent of its purchase price per year.
(2) The current market value of a car manufactured in the same year is $2,400.

I am sorry, I do not agree with this answer reasoning following
Show more

This is a question regarding market value of an asset.

I am an accountant and studied and passed the CPA exam and this logic is wrong. Would we ever see a question like this on the exam, because:.

Statement 1) Current market value of an asset is = CMV-Accumulated depreciation
In my world if you know these two values you can calculate the price of the asset to put on your books.

Statement 2) If you do not know the amount of accumulated depreciation CMV= Lower of Cost of the item or the current market value of the asset.

And if you do not know either of these you can calculate the value of an asset on your books through a couple other principles.
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If the market value of a car was $6,000 exactly 3 years ago 09 May 2012, 09:38
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Quote:
If the market value of a car was $6,000 exactly 3 years ago, what is its current market value?

Starting at the time of purchase, the market value of the car depreciated by 20 percent of its purchase price per year.
(2) The current market value of a car manufactured in the same year is $2,400.
Show more

(1)If the market value of a car was $6,000 exactly 3 years ago, what is its current market value?

(1) Starting at the time of purchase, the market value of the car depreciated by 20 percent of its purchase price per year.

NSF: We are unsure of the purchase price, and the depreciation is based on that, not the market value.

(2) The current market value of a car manufactured in the same year is $2,400. This is irrelevant.

E

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