CS Executive · Corporate Accounting and Financial Management · Accounting Standards
Under paragraph 6.91 of the Conceptual Framework, an entity estimates a measure using a cash-flow-based technique where the chosen measurement basis is fair value. Which requirement applies?
When fair value is the measurement basis and a cash-flow-based technique is used, the entity must identify the basis and how far the technique reflects the factors applicable to it. For fair value those factors are the ones described in paragraph 6.14.
- ANo further identification is needed because the technique fixes the basis
- BThe applicable factors are those described in paragraph 6.14, and the extent to which the technique reflects them must be identifiedCorrect
- CThe factors are those of fulfilment value only
- DThe technique must be replaced by historical cost
Explanation
Paragraph 6.91 requires identifying the measurement basis used and the extent to which the technique reflects the factors applicable to it. For fair value, the applicable factors are those in paragraph 6.14. Fulfilment value factors or historical cost are not what the text prescribes here.
Did you get it right without looking?
One question tells you little. A timed set on Accounting Standards shows your real accuracy, how long you take and where you lose marks.
More Accounting Standards questions
- Under the applicability list for companies not following Ind AS, what is the stated title of AS 12?
- Gupta Ltd had opening stock of 200 units at Rs 50 each. It purchased 300 units at Rs 60 each, then 100 units at Rs 70 each, in that order. D…
- Under the ICAI Compendium on applicability of Accounting Standards to companies not following Ind AS, which of the following statements abou…
- Under the Conceptual Framework, which statement about a modified measurement basis, such as fulfilment value modified to exclude own credit …
- A company's policy for valuing inventory is stated in a note to its accounts. Which statement about the disclosure of accounting policies un…
- Which of the following situations would require a disclosure under AS 1 regarding fundamental accounting assumptions?