Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders Equi 3. Measurement of the elements of the balance sheet The fasb has identified five alternative valuation methods Historical cost Current cost(or current replacement cost) Current market value(or current exit value) Net realizable value(or expected exit value) Present value
3. Measurement of the elements of the balance sheet The FASB has identified five alternative valuation methods : ➢ Historical cost ➢ Current cost (or current replacement cost) ➢ Current market value (or current exit value) ➢ Net realizable value (or expected exit value) ➢ Present value Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders’ Equity
Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders Equi valuation methods The historical cost of an asset is the exchange price in the transaction in which the asset was acquired
valuation methods The historical cost of an asset is the exchange price in the transaction in which the asset was acquired. Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders’ Equity
Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders Equi valuation methods The current cost of an asset is the amount of cash (or equivalent)that would be required on the date of the balance sheet to obtain the same asset
valuation methods The current cost of an asset is the amount of cash (or equivalent) that would be required on the date of the balance sheet to obtain the same asset. Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders’ Equity
Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders Equi valuation methods The current market value of an asset is the amount of cash(or equivalent)that could be obtained on the date of the balance sheet Dy selling the asset in an orderly liquidation
valuation methods The current market value of an asset is the amount of cash (or equivalent) that could be obtained on the date of the balance sheet by selling the asset in an orderly liquidation. Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders’ Equity
Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders Equi valuation methods The net realizable value of an asset is the amount of cash(or equivalent) into which the asset is expected to be converted in the ordinary operations of the company. less any expected conversion costs
valuation methods The net realizable value of an asset is the amount of cash (or equivalent) into which the asset is expected to be converted in the ordinary operations of the company, less any expected conversion costs. Intermediate Accounting 3 The Balance Sheet and Statement of Changes in Stockholders’ Equity