Which one of the following measurement bases applies to receivables?
A)Historical cost
B)An approximation of net realizable value
C)Selling price through factoring
D)Discounted present value

Question

Quizplus · Accepted Answer

Receivables are measured at an approximation of net realizable value, which is the estimated selling price less any costs of completion, disposal, and transportation. This measurement basis reflects the uncertainty associated with collecting the full amount of the receivables. Historical cost (A) is inappropriate because it does not capture changes in the economic value of the receivables. Selling price through factoring (C) and discounted present value (D) are not appropriate because they reflect transactions that are not necessarily representative of the underlying economic value of the receivables.

Which One of the Following Measurement Bases Applies to Receivables