Ethical Obligations and Decision-Making in Accounting 2nd Edition by Steven Mintz, Roselyn Morris

Exercise 7

International Accounting Standard No. 16 provides that property, plant and equipment can be accounted for under the cost method or the revaluation method. Evaluate each of these methods with respect to their conformity with representational faithfulness.

Step 1 of 2

Balance Sheet:

Balance Sheet is the statement of assets and liabilities and shareholders’ equity which provides information about the financial position of the company.

Assets:

Assets are the resources (property) for which monetary value can be attached. It is presented in the balance sheet.

Assets are classified into twotypes:

1. Current assets

2. Noncurrent assets

Current assets:

Current assets are those assets that can easily convert into cash within a short period.

Example: Debtor, bill of exchange, cash.

Noncurrent assets:

Noncurrent assets are those which are not purchased for the purpose of sale. These are acquired for the long term.It is also classified into fixed assets and intangible assets.

Example: Land, Building, Investment.