Question

Match the measurement bases with its definition. Definition Measurement Bases A. Amount of cash (or equivalent) that would be required if the asset were acquired currently. 5. Current market value B. Amount of cash (or equivalent) that would be received by selling the asset in an orderly liquidation. Liabilities may also be measured at current market value. 3. Net realizable value C. Amount of cash (or equivalent) that is paid to acquire the asset. In the case of a liability, this measurement base is the amount of cash (or equivalent) that is received when the obligation was incurred. This measurement base may change over the life of the asset/liability if it is adjusted for depreciation or amortization. 2. Current cost D. Amount of cash (or equivalent) that is expected to be received in exchange for an asset less the direct costs of the disposal. In the case of a liability, it is the amount of cash (or equivalent) expected to be paid to liquidate the obligation, including any direct costs of liquidation. 4. Present value of future cash flows E. Discounted net cash flows expected to be received on exchange of an asset, or paid out in the case of a liability. ▼

Answer 1

Answer and Explanation:

The matching is given below:

1. Historical cost: Historical cost is the cost that should be shown in the balance sheet. It is known as the real cost or original cost

hence, the correct option is C

2. Current cost: The current cost is the cost that should be incurred for the acquisition of an asset

Therefore the correct option is A

3. Net realizable value: The net realizable value is the value that could be determined by deducting any direct cost from the sale value also it would be use for pay off the liabilities

Therefore the correct option is D

4. Present value of future cash flows: The present value would be discounted at the particular rate of the market

Therefore the correct option is E.

5. Current market price: The amount of money that would be received when the asset is sold

Hence, the correct option is B.