Question

In: Accounting

Which measurement method would be most appropriate for the following...1. Inventory 2. Shares in a public company 3. Land 4. Lease (finance/capital lease) 5. Long-term receivable

Which measurement method would be most appropriate for the following items: historical cost, fair value, lower of cost and net realizable value, net realizable value, or present value?

1. Inventory

2. Shares in a public company

3. Land

4. Lease (finance/capital lease)

5. Long-term receivable

 

Required:

Identify the most appropriate measurement method for each item.

Solutions

Expert Solution

1. 

Inventory – lower of cost and net realizable value

 

2. 

Shares in a public company – Fair value

 

3. 

Land – Historical cost (ASPE) or historical cost or fair value (IFRS – depends on measurement model selected and use of land e.g. rental property)

 

4. 

Lease – Present value

 

5. 

Long term receivable – Present value


1.  Inventory – lower of cost and net realizable value

 2.  Shares in a public company – Fair value

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