The balance sheet value of assets and liabilities of a natural resources company are $100 million and $82 million, respectively. However, the fair value of assets and liabilities of the company are $112 million and $86 million, respectively. The asset-based valuation of the equity of the company is closest to: $18 million $26 million $112 million

So A - L = E. The "asset-based" approach is described as the fair market value of the company. Or more logically - What it would cost to recreate the business. So in this case $112 - 86m = 26m. Answer B

Question Of The Week - Equity (3) - CFA Level 1

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- AdaptPrep
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  18 Jul 2018 at 8:09 am
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  The balance sheet value of assets and liabilities of a natural resources company are $100 million and $82 million, respectively. However, the fair value of assets and liabilities of the company are $112 million and $86 million, respectively. The asset-based valuation of the equity of the company is closest to:
  - $18 million
  - $26 million
  - $112 million
- scarebaer
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  - CFA Level 2
  19 Aug 2018 at 12:30 pm
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  3
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  So A – L = E. The “asset-based” approach is described as the fair market value of the company. Or more logically – What it would cost to recreate the business. So in this case $112 – 86m = 26m. Answer B
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