The accountant of Broken Bay Plc decided to retain the historical cost of the entity's intangible assets because it was difficult to obtain fair value of these assets.This action is consistent with ____________.
A)substance over form
B)balancing of relevance and faithful representation
C)accrual accounting
D)cash accounting

Question

Quizplus · Accepted Answer

The decision of the accountant to retain the historical cost of the intangible assets is due to the difficulty in obtaining fair value, which is a common issue in accounting. Thus, the accountant chose to balance relevance (using historical cost which is a reliable measure over time) and faithful representation (reporting the actual cost of the assets) in determining the carrying amount of the intangible assets. This concept aligns with the principle of balancing relevance and faithful representation in financial reporting.

The Accountant of Broken Bay Plc Decided to Retain the Historical