QUESTION ANSWER Mangelo Restaurant had liabilities with a carrying value of $425,000 and fair value of $600,000. How should Mangelo report these liabilities on the balance sheet? Mangelo only needs to report the liabilities at the fair value and need not make any note of the carrying value of the liabilities. Mangelo only needs to report the liabilities at carrying value and need not make any note of the fair value. Mangelo should report the liabilities at the fair value and disclose the carrying value of the liabilities in a note to the financial statements. Mangelo should report the liabilities at the carrying value and disclose the fair value of the liabilities in a note to the financial statements. I DON'T KNOW YET
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Generally Accepted Accounting Principles (GAAP) require liabilities to be reported at their carrying amount (historical cost less amortization). However, there are exceptions, particularly if the fair value is significantly different and relevant. Show more…
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