Choice "C" is correct. Compensated absence liability should be calculated based upon the pay or salary rates in effect at the balance sheet date. The valuation of the noncurrent liability on the goverment-wide statement of net position will be equal to the number of hours employees are entitled to receive upon termination times the rate of pay earned at the balance sheet date, a point in time.Choice "a" is incorrect. Using the rates in effect at the time the compensated absences were earned would generally understate the liability (presuming salaries increase or individuals are promoted to higher pay grades) and not fully reflect the value of the liability to be paid out as of the balance sheet date.Choice "d" is incorrect. Using the rates to be in effect with the absences are paid would likely overstate the amount of the liability and, regardless, could not be objectively determined.Choice "b" is incorrect. Compensated absence liability should be calculated based upon the pay or salary rates in effect at the balance sheet date. There is no comparison of values. The valuation of the noncurrent liability on the goverment-wide statement of net position will be equal to the number of hours employees are entitled to receive upon termination times the rate of pay earned at the balance sheet date, a point in time.