FAR 1.1 CONCEPTUAL FRAMEWORK

Question 1

SFAC 7 provides framework for using present value of future cash flows as basis for accounting measurements

Answer 1

This framework includes measurements:
- At initial recognition,
- In fresh start remeasurements,
- For the interest method of allocation and
- For changes in estimated cash flows (catch up approach).

Question 2

Materiality and relevance are both defined by

Answer 2

What influences or makes a difference to a decision maker
Relevance is a primary qualitative characteristic which ensures that financial information is useful to make decisions. Materiality is also one of the concepts of relevance.