Recognition and Measurement

Question 1

Recognition

Answer 1

Refers to what, when, and where something is recorded on the financial statements

Question 2

Measurement

Answer 2

Refers to what amount is recorded on the financial statements

Question 3

Approaches to Determine Fair Value

Answer 3

1. Market Approach
2. Income Approach
3. Cost Approach

Question 4

Market Approach

Answer 4

Uses prices generated by real market transactions for identical or similar items

Question 5

Income Approach

Answer 5

Discount future amounts to a current present value

Question 6

Cost Approach

Answer 6

Uses the value required to replace the asset