Standards and Conceptual Framework (F1:M1)

Question 1

what is “the amount of cash that would be paid to acquire or replace an asset currently” called?

Answer 1

replacement cost

Question 2

according to SFAC No.8; ch.3, what are the two fundamental qualitative characteristics and their ingredients?

Answer 2

relevance (predictive/confirmatory value, materiality)

faithful representation (complete, neutral, free from error)

Question 3

according to SFAC No.8; ch.3, what are the four enhancing characteristics?

Answer 3

comparability
verifiability
timeliness
understandability

Question 4

according to SFAC No.7, what are the five elements of PV measurements?

Answer 4

estimate of future cash flow
expectations about timing variations of future cash flow
TVM
price for bearing uncertainty
other factors (e.g., market imperfections)