AASB 101's definition of current assets and further discussion at paragraph 59 will:
A) simplify the recognition of current assets.
B) require greater professional judgment in order to determine an entity's normal operating cycle.
C) improve analysts' decisions, as ratios that use current assets will use the same information.
D) have implications for assessing the liquidity of entities as current assets will now include fewer items.

Question

Quizplus · Accepted Answer

AASB 101's definition of current assets requires greater professional judgment in order to determine an entity's normal operating cycle. This is because the definition of current assets is any asset that is held for sale, for consumption or for conversion within the entity's normal operating cycle or within 12 months of the reporting period, whichever is longer. So, determining the entity's normal operating cycle requires professional judgment, which could make it more complex to recognize such assets.

AASB 101's Definition of Current Assets and Further Discussion at Paragraph