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CS Executive · Corporate Accounting and Financial Management · Accounting Standards

Under the Conceptual Framework, which statement about a modified measurement basis, such as fulfilment value modified to exclude own credit risk, is consistent with paragraph 6.92?

A modified measurement basis, such as fulfilment value excluding own credit risk, may sometimes produce more relevant information or be less costly to produce or understand. However, it may also be more difficult for users of financial statements to understand.

  1. AIt always produces information that is easier for users to understand
  2. BIt may give more relevant or less costly information but may be harder for users to understandCorrect
  3. CIt is prohibited when cash-flow-based techniques are used
  4. DIt must be used for all liabilities of a company

Explanation

Paragraph 6.92 says modifying measurement bases may sometimes give information that is more relevant or cheaper to produce or understand. It also says modified bases may be more difficult for users to understand. The option claiming they are always easier ignores this caution.

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