Advanced Financial Accounting: Measurement Principles, OCI, and De-recognition

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced financial accounting
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1ADVANCED FINANCIAL ACCOUNTING
Table of Contents
Answer 3....................................................................................................................................2
a. Factors required to be considered while selecting the basis for measurement...............2
b. Segregation of expenses and income in other comprehensive income...........................3
c. Removal of liabilities and assets from the financial statement.......................................3
Answer 5....................................................................................................................................4
Answer 6....................................................................................................................................5
Reference....................................................................................................................................8

2ADVANCED FINANCIAL ACCOUNTING
Answer 3
a. Factors required to be considered while selecting the basis for measurement
IASB proposed to include the revised conceptual framework for 3 measurement principles.
The principles are developed from the objective of financial reporting and qualitative
characteristics for constructive financial information for conceptual framework. These
principles are –
 1st Principle – relevance of the information delivered by specific measurement
approach are based on the way in which it affects the financial statements.
 2nd Principle – particular cost measurement shall be justified through the reporting
benefits providing the information to potential and existing investors, creditors and
lenders.
 3rd Principle – various measures used shall be minimum necessary for providing
relevant information. Avoidable changes for the measurement approaches shall be
avoided, and unavoidable changes shall be explained clearly (Richard Barker 2015).
Previously, the measurement used to be done on historical cost basis. Historical cost
is defined as amount of cash equivalent or cash paid or the fair value of any other
consideration provided for acquiring the asset while it is acquired or constructed or when it is
applicable. The amount considered is the amount contributed to the asset at the time of initial
recognition as per the requirement of IFRSs.
IASB segregated the measurement methods into 3 categories. These are –
 Fair value - as per IFRS 13, fair value is the price that will be received from selling
the asset or the amount paid for transferring the liability for the transaction among the
market participants on measurement date (Bertoni and De Rosa 2013).