Preparation of a Financial Statement

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Introduction In preparation of financial statements, it is important that an appropriate method is adopted for asset measurement within the financial reporting framework. Asset measurement has been in existence and practiced for years immemorial, for Vehmanen(2013, p.132) measurements involve assigning numeral to objects or events in accordance to a set of rules or standards. The gradual sophistication in financial reporting and evolution of global investment markets together with the increasing knowledgeable investors and financial reporting users have gingered interest in asset measurement methods. Organizations assets such as investments and marketable securities, fixed assets, inventory, intangible assets, etc. require proper valuation for investment potentials, financial reporting, audit, proper tax liability computation, litigation, capital budgeting and company valuation, among others. One of the singular facts for Enron collapse was inappropriate measurement of some of its assets (Benston, 2006, p.465), since there have been debates on choice of asset measurement methods; This paper therefore discusses some methods of asset measurement and analyzes, from the stakeholders’ perspective, which of them provides the most useful and true and fair view of an organization. Asset measurement Models There are various models of asset measurement, these include Historical Cost(HCA), current purchasing power(CPP), replacement cost(RCA) or current cost(CCA), Net realizable
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