Lecture 5: Measurement of Financial Statement Elements:

UNFINISHED

What is the definition of historical cost?

The cash or cash equivalents paid to first acquire an asset OR the proceeds in exchange for an obligation.

What is the definition of current value?

The measurement of monetary information about an asset, liability, income and/or expense using data at the measurement date.

What are the types of historical cost?

• Historical cost minus depreciation

• Historical cost

What are the types of current value?

• current cost

• fair value

• value in use/fulfillment value

What are some specific measurment cases? What measurement base is used?

• Receivables:

  • Typically expected value of cash/equivalents received;

  • If an amount is expected to be uncollectible, this is an allowance debt;

• Inventory:

  • Measured by the lower of cost price (cost to produce/acquire the product) and net realisable value (NRV, the expected profit gain from selling)