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Measurement - Coggle Diagram
Measurement
mixed measurement basis
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Those that prefer a single measurement method favour the use of current values to provide the most relevant information.
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example
A business that is profit orientated has processes to transform market input values (inventory for example) into market output values.(sales of finished products)
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In recent standards, it seems that the Board felt that fair value would not provide the most relevant information in all circumstances
For example, IFRS 9 requires the use of cost in some cases and fair value in other cases, while IFRS 15 essentially applies cost allocation
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Current values
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In the main, the details of how these different measurement methods are applied, are set out in each accounting standard.
Measurement uncertainty
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However, sometimes a measure with a high degree of uncertainty provides the most relevant information about an item
For example, financial instruments for which prices are not observable
The Board thinks that the level of measurement uncertainty that makes information lack relevance depends on the circumstances and can only be decided when developing particular standards.
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In order for the information to be relevant, it should be minimum measurement bases used for initial and subsequent measurement
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