![]() However, when the asset's value appreciates, its value is not written up to fair value. For example, when the value of an asset is impaired, it is written down to fair value an unrealized loss is recognized in the income statement. A major effect of conservatism is that accountants tend to recognize losses but not gains. ![]() The concept of conservation has been influential in the development of accounting theory and practice. (d) Give specific examples of how balance sheet measurements affect the measurement and reporting of earnings. ![]() (c) Describe and discuss the balance sheet approach and its importance to income reporting. (b) Give specific examples of how the matching concept is used in practice. (a) Describe and discuss the matching concept and its importance to income reporting. 5 definition of earnings represents a balance sheet approach to the measurement and report of revenues and expenses. 5 definition would flow through the income statement. Under this concept, asset and liabilities would be measured directly, and changes to them would flow through the income statement. 5 defined earnings as the change in net assets exclusive of investments by owners and distributions to owners, a capital maintenance concept of earnings measurement. The matching concept is therefore an income statement approach to the measurement and reporting of revenues and expenses. This concept implies that expenses should be measured directly, and thus balance sheet measure are residuals. The accounting profession has employed the matching concept to determine what to report in the income statement and to determine how to measure items reported in the income statement and to determine how to measure items reported in the income statement.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |