Much of the current thinking of accounting standard setters about measurement seems to be based on an idealized view of markets as being complete and in perfectly competitive equilibrium. In such conditions, there is a unique market price based on full information for every asset and liability, and there is an obvious attraction in using this price as the measure for accounting. This explains the apparent enthusiasm for single ideal measurement methods for all assets and liabilities. Required: Given that in reality, ideal conditions of markets are unlikely to hold, critically appraise whether a single measurement basis in financial reporting is appropriate.
Much of the current thinking of accounting standard setters about measurement seems to be based on an idealized view of markets as being complete and in perfectly competitive equilibrium. In such conditions, there is a unique market price based on full information for every asset and liability, and there is an obvious attraction in using this price as the measure for accounting. This explains the apparent enthusiasm for single ideal measurement methods for all assets and liabilities. Required: Given that in reality, ideal conditions of markets are unlikely to hold, critically appraise whether a single measurement basis in financial reporting is appropriate.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Much of the current thinking of accounting standard setters about measurement seems to be based on an idealized view of markets as being complete and in
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Given that in reality, ideal conditions of markets are unlikely to hold, critically appraise whether a single measurement basis in financial reporting is appropriate.
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