Explain and discuss the different measurement bases

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Reference no: EM133014285

Question - JUMAN is an accountant who works in ABC manufacturing firm located in the West Bank. JUMAN is discussing with the financial manager of ABC (FAWAZ) the main concepts underlying the preparation of financial statements. JUMAN states that the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) have developed a conceptual framework for financial accounting and reporting. JUMAN argues that there are different valuation methods or attributes for the elements of the financial statements. The financial manager states that using the historical cost measurement is highly relevant and contains representational faithful characteristic. The financial manager also argue that other financial statements elements could be representationally faithful but irrelevant. JUMAN adds that using fair market value may enhance relevance and representational faithful characteristics.

Required -

a. Explain and discuss the different measurement bases used in financial reporting and provide examples for elements in the financial statements (asset, expense, liability...)

b. Discuss the relevance and representational faithful for the measurement bases. Please provide your opinion on this issue.

c. Discuss the relevance of reporting the element "unrealized holding gain" in the financial statements. Provide your opinion.

Reference no: EM133014285

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