Question

Explain briefly the various measurement basis on the basis of which the monetary value of assets can be assessed.

Answer 1

The various measurement basis are:

(i) Historical Cost: Assets are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition.

(ii) Current Cost: Assets are carried at the moment of cash or cash equivalents that would have to be paid if the same or an equivalent asset was acquired currently.

(iii) Realisable (settlement) Value: Assets are carried at the amount of cash or cash equivalents that could currently be obtained by selling the asset in an orderly disposal.