M1 Standards and Conceptual Framework

Question 1

SFAC # 7 5 Characteristics of PV Measurement

Answer 1

The price for bearing uncertainty
Expectations about timing variations of future cash flows
Other factors (liquidity issues and market imperfections)
Time value of money (risk-free rate of interest)
Estimate of future cash flow

Question 2

FASB Framework - Useful Information

Answer 2

Qualitative characteristics of useful information are relevance and faithful representation

Question 3

Relevant

Answer 3

To be relevant information should have predictive and/or confirming value, and must be material.

Question 4

FASB Accounting Standards Update

Answer 4

Issued only after a majority vote by the members of the FASB

Question 5

Timeliness

Answer 5

Relevant characteristic that enhances the usefulness of information that is relevant and faithfully represented

Question 6

Interim Financial Reporting

Answer 6

Viewed as reporting from an integral part of an annual period

Question 7

SFAC # 8 Enhancing qualitative characteristics

Answer 7

Comparability, verifiability, timeliness, and understandability

Question 8

Replacement Cost

Answer 8

The amount of cash or its equivalent that would be paid to acquire or replace an asset currently. Replacement cost is an acquisition cost

Question 9

Neutrality

Answer 9

Freedom from bias in selection or presentation, an ingredient of faithful representation