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types of accounting measurements - Coggle Diagram
types of accounting measurements
historic cost
assets are recorded at the amount of cost or cash equvalents paid or at a far value of their aqqusition.
it ignores the amont the item could be sold for on the open market, called the fair value, untill its sold
lisabilaites are recorded at the amount of proceeds received in exchange for the obligaiton at the amount of cash or cash equivalents to be paid.
information may be more relvent in some cases
its conservative
the interests are better protected if measured conervitivley
investors may prefer things to be measured with caution.
advantages
objectivity
simplicity
conservative
doesnt include asset appreciation profits
consistency
the prpdomonent basis and most relevent basis for inpur assets
deprival value
how much worse of the business would be if they were without any of the assets.
net relisable value
value in use
stream of net future income,
replacement costs
value to the business
used to measure replacement costs
fair value costing
measures assets and liabilaties by estimating their current value