The following questions relate to the apparent divergence in view between the standard setters and the private sector, with respect to the need to shift from historical cost to current value accounting: (a)     In your opinion, why do standard setters moving away from traditional historical cost accounting? (b)     Why do think that the business community and the public accounting firms are so strongly opposed to a move away from historical cost accounting? (c)     Measurement principles are fundamental to any accounting system. Why does the Framework lack fully developed measurement concepts?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

The following questions relate to the apparent divergence in view between the standard setters and the private sector, with respect to the need to shift from historical cost to current value accounting:

(a)     In your opinion, why do standard setters moving away from traditional historical cost accounting?

(b)     Why do think that the business community and the public accounting firms are so strongly opposed to a move away from historical cost accounting?

(c)     Measurement principles are fundamental to any accounting system. Why does the Framework lack fully developed measurement concepts?

 

Expert Solution
Step 1

Historical cost takes into account the item's original price at the time and place of purchase. In contrast, current value accounting entails revising the worth of the things on a regular basis and recording them at that value, which is the price at which they may currently be sold in the market.

steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Earnings Quality, Measurement and Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education