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Week 3 Financial Accounting- Fair Value (Measurement in Accounting…

- - - - Different measurement bases are used
      - Variation across and within items
- - - - High: Measures an objective transaction
    - - High: HC easily understandable
    - - Low: Especially over time
    - - Medium: Purchasing power of money changes over time
- - - - Low: Can be subjective
    - - Medium: Can be subjective
    - - High: Determined by actual costs
    - - High: Indicative of future
- - - - Medium: Complex assumptions
    - - Medium: Many different assumptions
    - - Low: can be subjective
    - - High: Future potantial
- - - - Faithful representation: Determined using market prices
      - Understandably: Simple representation
      - Relevance: Focuses on future potential
      - Comparability: Focus on market value, not an individual entity
    - - Faithful representation: can be highly subjective
      - Understandability: Often based on complex assumptions
      - Relevance: Hypothetical
      - Comparability: Different models can lead to different results
- - - - May have worsened economic crisis
      - may not be reliable
      - May have hidden problems
      - Difficult to regulate
- - - - in the principal market for the asset or liability; or
      - in the absence of a principal market, in the most advantageous market for the asset or liability.
- - - - Legally Permissable
      - Financially Feasible
      - Physically Possible