What does present value mean on the CPA exam?
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Present value. What a future amount is worth today, once a discount rate has been applied for the waiting. The basis for measuring leases, pensions and most long-term liabilities.
Defined against ASC 820-10-55-5.
Which CPA exam sections use present value?
Present value appears in the FAR section of the CPA exam.
Related terms
- acquisition-date fair value: What something was worth on the day control changed hands.
- fair market value: The price at which property would change hands between a willing buyer and a willing seller, neither under compulsion and both reasonably informed.
- net realizable value: Estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.
- temporary difference: A difference between the tax basis of an asset or liability and its reported amount that will produce taxable or deductible amounts in future years.
- lease liability: The lessee's obligation to make the remaining lease payments, measured at their present value.
- capital gain net income: Capital gains minus capital losses for the year, long-term and short-term combined.