College of Accountancy: T-A-M T A M

COLLEGE OF ACCOUNTANCY
C-AE14 Conceptual Framework and Accounting Standards

First Semester | AY 2020-2021
MODULE 11
A. Course Code – Title : C-AE14 – Conceptual Framework and Accounting Standards
B. Module No – Title : MO 11 Measurement
C. Time Frame : 2 weeks – 6 hours
D. Materials : Syllabus or course outline, writing materials
1. Overview
This module takes on the general concepts for measurement. You will repeatedly encounter
these terms in the different financial reporting standards that you will study in higher accounting
courses.
Be sure to read and understand Chapter 6 of the Conceptual Framework. This module only
discusses the salient points and not every paragraph in the chapter. If you have questions
pertaining to some items in Chapter 6, feel free to ask them during the online sessions or through
the Google Classroom or any other previously agreed upon means.
2. Desired Learning Outcomes
Our goal is that, upon completing this module, you will be able to accomplish the following
learning outcomes:
 “I can enumerate the different measurement bases used in financial reporting.”
 “I can identify the information provided by a particular measurement base.”
 “I can discuss the factors to consider when selecting a measurement basis.”
3. Content/Discussion
Elements that are included in the financial statements have to be “measured” or stated in
monetary terms, otherwise, you will only end up with account titles and no amounts – thus, failing
miserably in your pursuit to provide useful financial information. So, in order for you to succeed,
you need to be equipped with the concepts pertaining to the possible measurement bases that
accountants use in order to achieve relevant and faithfully represented information that can be
relied upon the decision makers.
The Conceptual Framework provides the general concepts for measurement while financial
reporting standards provide a more specific set of guidelines for measurement. A Standard may
need to describe how to implement the measurement basis selected in that Standard. This
description could include specifying or explaining T-A-M:
a. Techniques that may or must be used to estimate a measure in applying a particular
measurement basis:
b. Approach (a simplified measurement approach, to be more precise) that is likely to
provide information similar to that provided by a preferred measurement basis; or
c. Modifying a measurement basis, for example, by excluding from the fulfillment
value of a liability the effect of the possibility that the entity may fail to fulfill that
liability (own credit risk).
Faculty: ROSALINDA E. PEREZ 1 | Page

Lesson 1 – Measurement Bases
According to the Conceptual Framework, a “measurement basis” is an identified feature of

an item being measured. Measurement bases can be classified into two – Historical Cost and
Current Value. Current value measurement bases include fair value, value in use (for assets)
fulfilment value (for liabilities), and current cost. A “measure” pertains to the result of applying a
measurement basis to an asset or liability and related income and expenses.
HISTORICAL COST
Historical cost – provides monetary information about the elements of financial statements
(ALEIE), using information derived, at least in part, from the price of the transaction or other event
that gave rise to them. It does not reflect the changes in values, except to the extent that those
changes relate to impairment of an asset or a liability becoming onerous.
Let’s pause for a while to broaden your vocabulary:
The last statement above contains at least two words which you may not have encountered
before. What are these two words? Let us build your vocabulary by identifying these two words and
providing their definitions. Be ethical so please do not forget to identify your source or provide the link
to it! Thanks! 
Word Definition Source or Link to Source
After doing this, check the end of this module to see if you got it correctly. I hope that you would make
it a habit to look for the meaning of terms that you encounter while you are studying accounting. This
will broaden your vocabulary and help you become good communicators of financial information.
Let’s now go back to our discussion about historical cost. The following are the salient points of the
paragraphs discussing historical cost:
 Indicated below are descriptions of what constitutes the historical cost of an asset or
liability (based on paragraph 6.5, 6.7, and 6.8):
1. Historical Cost of an Asset

 When acquired or created, the value of the costs incurred in acquiring or

creating the asset, comprising of
o The consideration paid to acquire or create the asset plus transaction
costs
Transaction costs – incremental costs that are directly attributable to the

acquisition, issue or disposal of a financial asset or financial liability. Example:
fees and commissions paid to agents, advisers, brokers, dealers
 Updated over time to depict, if applicable: (remember C-P-I-I)

o The consumption of part or all of the economic resource that
constitutes the asset (depreciation or amortization);
o Payments received that extinguish part or all of the asset;
o The effect of events that cause part or all of the historical cost of the
asset to be no longer recoverable (impairment); and,
o Accrual of interest to reflect any financing component of the asset.
2. Historical Cost of a Liability

 When incurred or taken on, the value of the consideration received to incur or
take on the liability minus transaction costs
 Updated over time to depict, if applicable: (remember F-O-I)
o Fulfilment of part or all of the liability (examples: by making payments,
by delivering goods or rendering services)
o The effect of events that increase the value of the obligation to transfer
the economic resources needed to fulfil the liability to such extent that
the liability becomes onerous.
An obligation is onerous if the historical cost is no longer sufficient to

depict the obligation to fulfil the liability.
o Accrual of interest to reflect any financing component of the liability.
 In case it may not be possible to identify a cost, or the cost may not provide relevant
information about the asset or liability, in some cases, a current value of the asset or liability
is used as a DEEMED cost.
Deemed cost is defined in IFRS 1 (First-time Adoption of International Financial Reporting

Standards) as “an amount used as a surrogate for cost or depreciated cost at a given date.
Subsequent depreciation or amortization assumes that the entity had initially recognized the
asset or liability at the given date and that its cost was equal to the deemed cost”.

 One way to apply a historical cost measurement basis to financial assets and financial
liabilities is to measure them through amortised cost.
Amortised cost – reflects estimates of future cash flows, discounted at a rate determined at
initial recognition. This is updated over time to depict subsequent changes, such as accrual
of interest, impairment of a financial asset and receipts or payments.
Financial asset - IAS 32 defines a financial asset as any asset that is:
 Cash
 An equity instrument of another entity
 A contractual right
 To receive cash or another financial asset from another entity; or
 To exchange financial assets or financial liabilities with another entity under
conditions that are potentially favorable to the entity; or
 A contract that will or may be settled in the entity’s own equity instrument and is:
 A non-derivative for which the entity or may be obliged to receive a variable
number of the entity’s own equity instruments
 A derivative that will or may be settled other than by the exchange of a fixed
amount of cash or another financial asset for a fixed number of the entity’s
own equity instruments, that are themselves contracts for the future receipt
or delivery of the entity’s own equity instruments.
Examples of financial assets are cash, investment in equity securities, accounts/notes/loans

receivable, investment in debt instruments issued by other entities, derivative financial
assets.
All other assets that did not qualify as financial assets are considered non-financial assets.
Some examples are:
a. Physical assets like inventories, biological assets, property, plant and equipment
b. Intangible assets like copyrights, patents and trademarks
c. Prepaid expenses
d. Current and deferred tax assets
Financial liability - IAS 32 defines a financial liability as any liability that is:
a. A contractual obligation
 To deliver cash or another financial asset to another entity; or
 To exchange financial assets or financial liabilities with another entity under
conditions that are potentially unfavorable to the entity; or
b. A contract that will or may be settled in the entity’s own equity instruments and is:
 A non-derivative for which the entity is or may be obliged to deliver a
variable number of the entity’s own equity instruments.
 A derivative that will or may be settled other than by the exchange of a fixed
amount of cash or another financial asset for a fixed number of the entity’s
own equity instruments.

Examples of financial liabilities include:

a. Accounts and notes payable
b. Loans payable
c. Bonds payable
d. Other debt instruments issued by the entity (commercial paper)
e. Derivative financial liabilities
f. Obligations to deliver own shares worth a fixed amount of cash
g. Some derivatives on own equity instruments
All other liabilities that did not qualify as financial liabilities are considered non-
financial liabilities. Some examples are:
a. Deferred revenue
b. Warranty liability
c. Current and deferred tax liabilities
d. Constructive obligations
CURRENT VALUE
Current value provides monetary information about the elements of financial statements using
information updated to reflect conditions at the measurement date. Current values reflect changes,
since the previous measurement date.
Current value measurement bases include fair value, value in use (for assets) and fulfilment value
(for liabilities), and current cost.
a. Fair value
 It is the price that would be received to sell an asset, or paid to transfer a
liability, in an orderly transaction between market participants at the
measurement date.
 Fair value reflects the perspective of market participants. It can be

determined by directly observing prices in an active market or indirectly
using measurement techniques like cash-flow-based techniques which
reflect all of the following factors:
 Estimates of future cash flows
 Possible variations in the estimated amount or timing of future cash
flows for the asset or liability being measured, caused by the
uncertainty inherent in the cash flows
 The time value of money
 The price for bearing the uncertainty inherent in the cash flows (a
risk premium or a risk discount)
Risk premium – the expected excess return on a security or portfolio where

excess return is the difference between an actual return and that of a
riskless security. (Sharpe)

In finance, the risk premium is often measured against Treasury bills, the
safest and generally lowest-yielding investment. (Hussain, 2020)
Risk discount – refers to a situation in which an investor accepts lower

expected returns in exchange for lower risk. (Hussain, 2020)
 Other factors, for example, liquidity.
 These factors include the possibility that the counterparty may fail to fulfil
its liability (credit risk), or that the entity may fail to fulfil its liability (own
credit risk).
 Effect of transaction costs on fair value

Fair value is not increased by the transaction costs incurred when acquiring
the asset and is not decreased by transaction costs incurred when the
liability is incurred or taken on. It does not reflect the transaction costs that
would be incurred on the ultimate disposal of the asset or on transferring or
settling the liability.
This is because fair value is not derived from the price of the transaction or
other event that gave rise to the asset or liability.
b. Value in use for assets and fulfilment value for liabilities

 Value in use is the present value of the cash flows, or other economic benefits
that an entity expects to derive from the use of an asset and from its ultimate
disposal.
 Fulfilment value is the present value of the cash, or the other economic
benefits, that an entity expects to be obliged to transfer as it fulfills a liability.
 Transaction costs, incurred on acquiring an asset or taking on a liability, are

not included in value in use and fulfilment value – this is because the
aforementioned measurement bases are derived from future cash flows.
 However, value in use and fulfilment value include the present value of any
transaction costs an entity expects to incur on the ultimate disposal of an
asset or on fulfilling the liability.
 Value in use and fulfilment value reflect entity-specific assumptions rather

than assumption by market participants.
 Value in use and fulfilment value cannot be observed directly and are
determined using cash-flow-based measurement techniques.

c. Current cost
 The current cost of an asset is the cost of an equivalent asset at the
measurement date, comprising the consideration that would be paid at the
measurement date plus the transaction costs that would be incurred at that
date.
 The current cost of a liability is the consideration that would be received for
an equivalent liability at the measurement date minus the transactions costs
that would be incurred at that date.
 Like historical cost, current cost is an entry value – it reflects prices in the
market in which the entity would acquire the asset or would incur a liability.
However, unlike historical cost, current cost reflects conditions at the
measurement date.
 Fair value, value in use and fulfilment values are exit values.
 If current cost cannot be determined directly by observing prices in an

active market, it must be determined indirectly by other means. Example, if
the price that is available is for a new asset only, then the current cost of a
used asset might need to be estimated by adjusting the current price of a
new asset to reflect the current age and condition of the asset held by the
entity.
Lesson 2 – Information Provided by Measurement Bases
Historical Cost
 If an entity acquired an asset in a recent transaction on market terms, the entity expects
that the asset will provide sufficient economic benefits that the entity will at least recover
the cost of the asset.
 If a liability was incurred or taken on as a result of a recent transaction on market terms, the
entity expects that the value of the obligation to transfer.
 Measuring an asset or liability at historical cost provides relevant information about both
the asset or liability and the price of the transaction that gave rise to that asset or liability.
For the following statements, look for the missing word in the paragraphs in the Conceptual
Framework (Chapter 6) indicated per item:

 If an asset other than a financial asset is measured at historical, consumption or sale of the
asset or of part of the asset, gives rise to an expense measured at the _________________________
of the asset, or of part of the asset, consumed or sold. (6.27)
 The expense arising from the sale of an asset is recognized at the same time as the
consideration for that sale is recognized as ____________________. (6.28)
 The difference between the income and expense is the __________________ resulting from the
sale. Expenses arising from the consumption of an asset can be compared to related income
to provide information about margins. (6.28)
 The fulfilment of all or part of the liability gives rise to income measured at the value of the
consideration received for the part fulfilled. The difference between that income and the
expenses incurred in fulfilling the liability is the ____________ resulting from the fulfilment.
(6.29)
 Information about the cost of assets sold or consumed, including goods and services
consumed immediately, and about the consideration received may have
_______________________. (6.30)
 Income and expenses measured at historical cost may also have ___________________ because
they may provide feedback to users of financial statements about their previous predictions
of cash flows or of margins. (6.30)
 Information about interest earned on assets, and interest incurred on liabilities, measured
at amortised cost may have ____________________ and ____________________. (6.31)
Current Value
Fair Value
 Market participants’ expectations are priced in a manner that reflects the __________________
preferences of market participants. That information may also have confirmatory value by
providing feedback about previous expectations. (6.32)
 This information may also have ________________ which means that it can be used as an input
in predicting future income and expenses. (6.33)
 If an entity acquired an asset in one market and determines fair value using prices in a
different market, any difference between the prices in those two markets is recognized as
________________ when that fair value is first determined. (6.35)
Value in Use and Fulfillment Value

 Information about the present value of the estimated cash flows from the use of an asset
and from its ultimate disposal or the estimated cash flows needed to fulfil a liability may
have ________________________. (6.37 and 6.38)
 Updated estimates of value in use or fulfilment value combined with information about
estimates of the amount, timing and uncertainty of future cash flows, may also have
________________ because they provide feedback about previous estimates of value in use or
fulfilment value. (6.39)
Current Cost
 Information about assets and liabilities measured at current cost may be relevant because
current cost reflects the cost at which an equivalent asset could be acquired or created at
the measurement date or the consideration that would be received for incurring or taking
on an equivalent liability.
 When price changes are __________________, margins based on current cost may be more useful
for predicting future margins than margins based on historical cost. (6.41)
 To report the current cost of consumption or current income from fulfilment, it is necessary
to split the change in carrying amount in the reporting period into the current cost of
consumption and the effect of changes in prices. The effect of a change in prices is
sometimes referred to as a ____________________ or a _________________ (6.42)
For more information about the this lesson, you can read and study Table 6.1 Summary of
information provided by particular measurement bases on page 58 to 62 of the Conceptual
Framework.
Lesson 3 – Factors to Consider when Selecting a Measurement Basis, and other

concerns
1. It is necessary to consider the nature of the information that the measurement basis will
produce, as well as other factors. In most cases, no single factor will determine which
measurement basis should be selected. The relative importance of each factor will depend
on facts and circumstances.
2. The information provided must be useful to users of financial statements.
a. Relevance
 If the value of an asset or liability is sensitive to market factors or other
risks, its historical cost might differ significantly from its current value.
Which measurement basis would provide a more relevant set of
information? _________________________

 Historical cost may not provide timely information. Income and expenses
reported on that basis may lack predictive value and confirmatory value.
 Another factor that must be considered is how the chosen measurement
basis will affect the relevance of the information particularly about assessing
future cash flows.
b. Faithful representation
 What will happen if assets and liabilities that are related in some way are
measured using different measurement bases? ---- This is measurement
inconsistency (accounting mismatch).
 Although a perfectly faithful representation is free from error, this does not
mean that measures must be perfectly accurate in all respects.
 Uncertainty
o Measurement uncertainty – arises when a measure cannot be

determined directly by observing prices in an active market and
must instead be estimated,
o Outcome uncertainty – arises when there is uncertainty about the

amount or timing of any inflow or outflow of economic benefits that
will result from an asset or liability.
o Existence uncertainty – arises when it is uncertain whether an asset

or a liability exists.
The presence of outcome uncertainty or existence uncertainty may

sometimes contribute to measurement uncertainty, but these do not
necessarily result in measurement uncertainty.
c. Enhancing qualitative characteristics and the cost constraint

 Comparability is achieved when the same measurement bases for the same
items are consistently used.
 Understandability
 A change in measurement basis can make the financial statements
less understandable. Check if the other factors outweigh the
reduction in understandability.
 It also depends partly on how many different measurement bases
are used and on whether they change over time.
 Verifiability is enhanced by using measurement bases that result in

measures that can be independently corroborated either directly or
indirectly.

 Cost constraint - In selecting a measurement basis, it is important to

consider whether the benefits of the information provided are likely to
justify the costs incurred in providing and using that information.
The following specific provisions indicate how the enhancing characteristics

will be affected by the choice of measurement basis. Pay close attention to
how the characteristics are either enhanced or reduced.
Enhancing characteristics and historical cost
 In many cases, it is simpler and less costly to measure historical cost than
current value. Applying a historical measurement basis is generally well
understood, and in many cases, verifiable.
 However, as in the case when identical assets are acquired at different times,
different amounts are reported in the financial statements. This can
(enhance, reduce) comparability. (6.71)
Enhancing characteristics and current value
 Because fair value is determined from the perspective of market participants

and is independent of when the asset was acquired or the liability was
incurred, identical assets or liabilities measured at fair value will be
measured at the same amount by entities that have access to the same
markets. This can enhance intracomparability (period to period for a
reporting entity) and intercomparability (in a single period across entities).
 Because value in use and fulfilment value reflect entity-specific perspective,

those measures could differ for identical assets or liabilities in different
entities. Those differences may reduce comparability.
 If fair value is determined directly by observing prices in an active market,

the process of fair value measurement is low-cost , simple, easy to
understand and verifiable. Thus, if fair value is indirectly determinable, then
estimating the value may be costly and complex. The inputs may be
subjective and it may be difficult to verify. Measures of identical assets or
liabilities may differ, resulting to reduced comparability.
 In cases when value in use for an individual asset cannot be determined

meaningfully because only the value of a group of assets is available, there is
a need to allocate the values to individual assets. This can be subjective and
arbitrary. The process may be costly and complex. The subjectivity reduces
verifiability. There is a need to assess if value in use is indeed the most
appropriate measurement basis for these assets.

 Using current cost measurement basis, identical assets acquired or liabilities

incurred at different times are reported in the financial statements at the
same amount. This can enhance comparability (inter and intra). In case
when changes in technology and in business practices would cause many
assets to not be replaced with identical assets, a subjective adjustment
would be required in order to estimate the current cost of an asset. Splitting
the changes in current cost carrying amounts between the cost of
consumption and effects of changes in prices may be complex and require
arbitrary assumption. These may result to lack of verifiability and
understandability.
The following are factors specific to initial measurement

 At initial recognition, the cost of the asset acquired, or of a liability
incurred, as a result of an event that is a transaction on market terms is
normally similar to its fair value at that date, unless transaction costs are
significant.
 An income or expense is determined when an entity acquires an asset, or

incurs a liability, in exchange for transferring another asset or liability as
a result of a transaction on market terms.
 When an asset/liability is measured at cost, no income or expense arise

at initial recognition unless the income or expense arise from the
derecognition of the transferred asset/liability or unless the asset is
impaired/liability is onerous.
 At times, deemed cost may be appropriate if assets may be acquired, or

liabilities may be incurred as a result of an event that is not a transaction
on market terms (6.80 a, b, c, d). All relevant aspects should also be
looked into (6.82)
 Any difference between that deemed cost and any consideration given or
received would be recognized as income or expenses at initial
recognition.
 In case more than one measurement basis is selected, the total income or
total expenses arising in the period from the change in current value is
separated and classified.
 The carrying amount of equity is not measured directly. It equals the

total of the carrying amounts of all recognized assets less the total of
carrying amounts of all recognized liabilities.
 The carrying amount of the equity will not generally equal:

o The aggregate market value of the equity claims on the entity.

o The amount that could be raised by selling the entity as a whole
on a going concern basis
o The mount that could be raised by selling all of the entity’s assets
and settling all of its liabilities
 Total equity is generally positive, but it can be negative.
 Cash flow-based measurement techniques can be used in applying a

modified measurement basis which may sometimes result in
information that is more relevant to the users of financial statements or
that may be less costly to produce or to understand
 As regards outcome uncertainty, different central estimates provide

different information.
o The expected value (probability-weighted average, also known
as the statistical mean) – the entire range of outcomes and gives
more weight to most likely outcomes.
o The maximum amount that is more likely than not to occur
(similar to the statistical median) – probability of subsequent
gain or loss is no more than 50%
o The most likely outcome (statistical mode) – single most likely
ultimate inflow or outflow arising from an asset or liability
o No central estimate gives complete information about the range
of possible outcomes. Hence, users may need information about
the range of possible outcomes.
4. Progress Check:
Role play: You are the guest lecturer/resource speaker invited by JPIA-UA to talk
about “Measurement”. Dress appropriately (business attire) and observe proper
grooming. Stand in front of a mirror and present your report using the following
guide. You can record your presentation, view it afterwards and take note of the
things that you did well, and the things that you can still improve.
1) Enumerate the different measurement bases used in financial reporting.

2) Identify the information provided by each measurement base.
3) Discuss the factors to consider when selecting a measurement basis.
After completing this progress check, can you now say that you have achieved our learning
outcomes?
“I can enumerate the different measurement bases used in financial reporting.”
“I can identify the information provided by a particular measurement base.”
“I can discuss the factors to consider when selecting a measurement basis.”

5. Evaluation – to be uploaded as a separate Google Form
E. References
Cabrera, M. E., Ocampo, R. R., & Cabrera, G. A. (2018). Conceptual Framework and Accounting
Standards. Manila, Philippines: GIC Enterprises & Co., Inc.
Empleo, P. M., & Robles, N. S. (2019). The Philippine Financial Reporting Conceptual
Framework and Accounting Standards. Mandaluyong City, Philippines: Millennium Books,
Inc.
IFRS Foundation. (2017). ifrs.org. Retrieved June 11, 2020, from https://www.ifrs.org/use-
around-the-world/use-of-ifrs-standards-by-jurisdiction/philippines/#participant
International Accounting Standards Board. (2018, March). Conceptual Framework for

Financial Reporting. London, United Kingdom.
Millan, Z. V. (2019). Conceptual Framework and Accounting Standards. Baguio City,

Philippines: Bandolin Enterprise Publishing and Printing.
Valix, C. T., Peralta, J. F., & Valix, C. A. (2019). Conceptual Framework and Accounting
Standards. Manila, Philippines: GIC Enterprises & Co., Inc.
Word Definition Source (Cambridge Dictionary)

Impairment a situation in which the value of https://dictionary.cambridge.org
an asset is recorded as being greater than /us/dictionary/english/impairme
the amount of money that it could be sold for nt
onerous causing great difficulty or trouble https://dictionary.cambridge.org
/us/dictionary/english/onerous

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COLLEGE OF ACCOUNTANCY

C-AE14 Conceptual Framework and Accounting Standards

2. Desired Learning Outcomes

Faculty: ROSALINDA E. PEREZ 1 | Page

Lesson 1 – Measurement Bases

According to the Conceptual Framework, a “measurement basis” is an identified feature of

Let’s pause for a while to broaden your vocabulary:

Word Definition Source or Link to Source

Faculty: ROSALINDA E. PEREZ 2 | Page

 When acquired or created, the value of the costs incurred in acquiring or

Transaction costs – incremental costs that are directly attributable to the

 Updated over time to depict, if applicable: (remember C-P-I-I)

o Payments received that extinguish part or all of the asset;

o Accrual of interest to reflect any financing component of the asset.

2. Historical Cost of a Liability

An obligation is onerous if the historical cost is no longer sufficient to

o Accrual of interest to reflect any financing component of the liability.

Deemed cost is defined in IFRS 1 (First-time Adoption of International Financial Reporting

Faculty: ROSALINDA E. PEREZ 3 | Page

Examples of financial assets are cash, investment in equity securities, accounts/notes/loans

Faculty: ROSALINDA E. PEREZ 4 | Page

Examples of financial liabilities include:

 Fair value reflects the perspective of market participants. It can be

Risk premium – the expected excess return on a security or portfolio where

Faculty: ROSALINDA E. PEREZ 5 | Page

Risk discount – refers to a situation in which an investor accepts lower

 Other factors, for example, liquidity.

 Effect of transaction costs on fair value

b. Value in use for assets and fulfilment value for liabilities

 Transaction costs, incurred on acquiring an asset or taking on a liability, are

 Value in use and fulfilment value reflect entity-specific assumptions rather

Faculty: ROSALINDA E. PEREZ 6 | Page

 If current cost cannot be determined directly by observing prices in an

Lesson 2 – Information Provided by Measurement Bases

Faculty: ROSALINDA E. PEREZ 7 | Page

Value in Use and Fulfillment Value

Faculty: ROSALINDA E. PEREZ 8 | Page

Lesson 3 – Factors to Consider when Selecting a Measurement Basis, and other

2. The information provided must be useful to users of financial statements.

Faculty: ROSALINDA E. PEREZ 9 | Page

o Measurement uncertainty – arises when a measure cannot be

o Outcome uncertainty – arises when there is uncertainty about the

o Existence uncertainty – arises when it is uncertain whether an asset

The presence of outcome uncertainty or existence uncertainty may

c. Enhancing qualitative characteristics and the cost constraint

 Verifiability is enhanced by using measurement bases that result in

Faculty: ROSALINDA E. PEREZ 10 | Page

 Cost constraint - In selecting a measurement basis, it is important to

The following specific provisions indicate how the enhancing characteristics

Enhancing characteristics and historical cost

Enhancing characteristics and current value

 Because fair value is determined from the perspective of market participants

 Because value in use and fulfilment value reflect entity-specific perspective,

 If fair value is determined directly by observing prices in an active market,

 In cases when value in use for an individual asset cannot be determined

Faculty: ROSALINDA E. PEREZ 11 | Page

 Using current cost measurement basis, identical assets acquired or liabilities

The following are factors specific to initial measurement

 An income or expense is determined when an entity acquires an asset, or

 When an asset/liability is measured at cost, no income or expense arise

 At times, deemed cost may be appropriate if assets may be acquired, or

 The carrying amount of equity is not measured directly. It equals the

 The carrying amount of the equity will not generally equal: