Initial Subsequent Measurement
Account Title/Category Definition
Cash Cash simply means money. Cash
includes “money and any other
negotiable instrument that is
payable in money and
acceptable by the bank for
deposit and immediate credit”.
Cash Equivalent PAS 7 defines “cash equivalent
as short term, highly liquid
investment that are readily
convertible into cash and so
near their maturity that they
present insignificant risk of
exchange in value because of
change in interest rates”.
Accounts Receivable Accounts Receivable are open
accounts arising from sale of
merchandise or services in the
ordinary course of business.
Notes Receivable Notes receivable are those
supported by formal promises
to pay in the form of notes.
Accrued Interest on Notes
Receivable
Inventories
Recognition
PAS 1 provides that “an entity
shall classify an asset as current
when the cash or a cash
equivalent unless it is restricted
from being exchanged or used
to settle a liability for at least
twelve months after the end of
the reporting period.
Only highly liquid investments
that are acquired three moths
before maturity can qualify as
cash equivalents.
The fair value of a financing
asset is usually the transaction
price or original exchange rate.
Measurement
Cash is valued at face If a bank or financial institution holding th
value. Cash in foreign funds of the company is in bankruptcy o
currency is valued at the financial difficulty, cash is should be writte
current exchanged rate. down to estimated realizable value if th
amount recoverable is estimated to b
lower than the face value.
Accounts Receivable shall Subsequently the accounts receivable sha
be measured initially at be measured at net realizable valu
face value or original meaning the amount at cash expected to b
invoice amount. collected or the collected or the estimate
recoverable amount.