Which element on the balance sheet is the least reliable, in the sense that there is often a large discrepancy between its book value and its market value? A

Economics Oct 20, 2020

Which element on the balance sheet is the least reliable, in the sense that there is often a large discrepancy between its book value and its market value?

A.Book value of current liabilities

B.Book value of long-term debt

C.Book value of current assets

D.Book value of equity

Expert Solution

Book value of equity element on the balance sheet is the least reliable, in the sense that there is often a large discrepancy between its book value and its market value. Because there is no discrepancy in long term debt, current assets & current liabilities. Equity is difference between total assets and total liabilities.

Equity = Total assets - Total liabilities

Hence, the correct option is D). Book value of equity

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