Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 2, Problem 2.18BE
Measurement Bases. Match the measurement basis with its definition.
| Measurement Bases | Definition |
| ___ 1. Historical cost | A. Amount of cash (or equivalent) that would be required if the asset were acquired currently. |
| ___ 2. Current cost | B. Amount of cash (or equivalent) that would be received by selling the asset in an orderly liquidation. Liabilities may also be measured at current market value. |
| ___ 3. Net realizable value | C. Amount of cash (or equivalent) that is paid to acquire the asset. In the case of a liability, this measurement base is the amount of cash (or equivalent) that is received when the obligation was incurred. This measurement base may change over the life of the asset/liability if it is adjusted for depreciation or amortization. |
| ___ 4. Present value of future cash flows | D. Amount of cash (or equivalent) that is expected to be received in exchange for an asset less the direct costs of the disposal. In the case of a liability, it is the amount of cash (or equivalent) expected to be paid to liquidate the obligation, including any direct costs of liquidation. |
| ___ 5. Current market value | E. Discounted net |
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Students have asked these similar questions
Which of the following statements is true for historical cost valuations? (Select one or more)
a. Present value of cash flows using historical interest rates is an item in which cash receipts or cash payments will occur over time, these future cash flows are then discounted at the interest rate in effect at the time of the initial transaction. Balance sheet examples include notes receivable and notes payable.
b. Acquisition cost is the amount paid initially to acquire the asset, examples include prepayments, land, and intangibles with indefinite lives.
c. Acquisition cost is the amount paid initially to acquire the asset, examples include amounts invested in research and development for intellectual property.
d. Adjusted acquisition cost is the amount paid initially to acquire an asset less accumulated depreciation and amortization, examples include equipment and intangible assets with limited lives.
Valuing assets at the amount of cash or equivalents paid or the fair value of the consideration given to acquire them at the time of acquisition most closely describes which measurement of fi nancial statement elements? A . Current cost
Which of the following phrases best describes the term " actual cash value"?
a. market value
b. appraised value
c. replacement cost less depreciation
d. original cost less depreciation
Chapter 2 Solutions
Intermediate Accounting
Ch. 2 - Prob. 2.1QCh. 2 - Why is a conceptual framework of accounting...Ch. 2 - Prob. 2.3QCh. 2 - Prob. 2.4QCh. 2 - Prob. 2.5QCh. 2 - Prob. 2.6QCh. 2 - What is predictive value?Ch. 2 - Prob. 2.8QCh. 2 - When is financial information considered...Ch. 2 - Prob. 2.10Q
Ch. 2 - Prob. 2.11QCh. 2 - Prob. 2.12QCh. 2 - What is the recognition principle and when is an...Ch. 2 - What is the revenue recognition principle and when...Ch. 2 - Prob. 2.15QCh. 2 - When are expenses recognized under IFRS?Ch. 2 - How are transactions recorded under accrual...Ch. 2 - Prob. 2.18QCh. 2 - Prob. 2.19QCh. 2 - Prob. 2.20QCh. 2 - Prob. 2.21QCh. 2 - Prob. 2.22QCh. 2 - Prob. 2.23QCh. 2 - Prob. 2.1BECh. 2 - Prob. 2.2BECh. 2 - Objective of Financial Reporting. Explain the...Ch. 2 - Prob. 2.4BECh. 2 - Fundamental and Enhancing Characteristics....Ch. 2 - Prob. 2.6BECh. 2 - Prob. 2.7BECh. 2 - Prob. 2.8BECh. 2 - Fundamental and Enhancing Characteristics....Ch. 2 - Faithful Representation. Match the component of a...Ch. 2 - Prob. 2.11BECh. 2 - Prob. 2.12BECh. 2 - Expense Recognition. Discuss the three main...Ch. 2 - Element Definitions. Identify whether the...Ch. 2 - Prob. 2.15BECh. 2 - Element Definitions, U.S. GAAP, IFRS. Identify...Ch. 2 - Prob. 2.17BECh. 2 - Measurement Bases. Match the measurement basis...Ch. 2 - Cash versus Accrual Bases of Accounting. The...Ch. 2 - Prob. 2.20BECh. 2 - Prob. 2.21BECh. 2 - Assumptions in Financial Reporting. Indicate the...Ch. 2 - Conceptual Framework. Noeleen Auto Mall, Ltd....Ch. 2 - Qualitative Characteristics. Referring to the...Ch. 2 - Prob. 2.3ECh. 2 - Prob. 2.4ECh. 2 - Terms and Concepts. Complete the following...Ch. 2 - Prob. 2.6ECh. 2 - Cash versus Accrual Bases of Accounting. Top Notch...Ch. 2 - Cash vs. Accrual. you are provided the following...
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- Which of the following assertions is relevant to whether the cash balances reflect the true underlying economic value of those assets? a. Existence/occurrence. b. Completeness. c. Rights and obligations. d. Valuation or allocation. e. All of the above.arrow_forwardUnder the direct method of preparing a statement of cash flows, what adjustment is made for depreciation expense?arrow_forwardFAR- Conceptual Framework Kindly help me answer the following : 1. Which of the following should be considered a current value measure? * a. Replacement cost and discounted cash flow b. Replacement cost and exit value c. Replacement cost, exit value and discounted cash flow d. Exit value and discounted cash flow 2. Obligations to transfer an economic resource include all, except * a. Obligation to provide services b. Obligation to pay cash c. Obligation to transfer an economic resource even if a specified future event does not occur d. Obligation to deliver goods 3. Which is not a purpose of the Conceptual Framework? * a. To assist accountants in selecting among alternative accounting and reporting methods. b. To provide definitions of key terms and concepts. c. To assist IASB in the standard-setting process. d. To provide specific guidelines for resolving situations not…arrow_forward
- Which of the following is excluded when projecting future cash flows for the purpose of determining an asset’s value in use? a. Revenues to be derived from the continuing use of the assetb. Residual value of the assetc. Costs of future improvements on the assetd. Disposal costs of the assetPLEASE ADD REFERENCE OR CITATIONarrow_forwardWhen an asset or liability is initially recorded, what determines its amount? The Replacement cost The initial measurement The future value of future cash flowsThe present value of future cash flowsarrow_forward(5). Intangible assets are initially recorded at (a). cost (b). expected future value (c). expected present value of expected cash flows (d). present fair valuearrow_forward
- Under IFRS, value-in-use is defined as: a. net realizable value. b. fair value. c. future cash flows discounted to present value. d. total future undiscounted cash flows.arrow_forwardThe primary measurement basis is A.The current market price if the asset currently held was sold on the open market. B. The current market price if the asset held was purchased on the open market. C. The present value of the cash flows that the asset is expected to generate. D. The market price at the date the asset was acquired.arrow_forwardSalvage value of a piece of equipment would show on the cash flow diagram as what? Select one: a. inflow b. outflow C. revenue d. expensearrow_forward
- Valuing assets at the amount of cash or equivalents paid or the fair value of the consideration given to acquire them at the time of acquisition most closely describes which measurement of fi nancial statement elements? B . Historical cost.arrow_forwardWe can separate cash return on assets into: a. Cash flow to sales and return on assets. b. Profit margin and asset turnover. c. Cash flow to sales and profit margin. d. Cash flow to sales and asset turnover.arrow_forwardIn terms of future value (FV) which of the following considerations is correct? Select one: O A. Consider only future cash flows as relevant factors O B. Consider only past cash flows as relevant factors O C. Consider past sales revenues and cost of sales as relevant factors O D. Consider future gross profit and net profits as relevant factorsarrow_forward
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