Advise the Board of Directors which of the following THREE statements are disadvantages of the net asset basis of valuation?

Company H is considering the valuation of an unlisted company which it hopes to acquire.

It has obtained the target company’s financial statements.

Company H has been advised that the book value of net assets as shown in the financial statements of the target company does not provide a reliable indicator of their true value.

Advise the Board of Directors which of the following THREE statements are disadvantages of the net asset basis of valuation?
A . The net book value of assets is merely a record of past transactions which complies with accounting conventions.
B . The net book value of assets can be obtained from the financial statements.
C . Intangible assets are often not shown in the company’s financial statements.
D . The net realisable value is usually different from the net book value shown in the financial statements.
E . The net book value of current assets is normally a reliable indicator of their realisable value.

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Answer: A,C,D