Constraints and Present Value Flashcards
1
Q
What is the cost constraint?
A
the cost constraint of GAAP limits recognition and disclosure if the cost of providing the information exceeds the cost.
2
Q
According to SFAC 7, Using Cash Flow Information and Present Value in Accounting Measurements, the most relevant measurement of an entity’s liabilities at initial recognition and fresh-start measurements should always reflect
A
The most relevant measure of liability always reflects the credit standing of the entity obligated to pay, according to SFAC 7. Those who hold the entity’s obligations as assets incorporate the entity’s credit standing in determining the prices they are willing to pay.
