Cash Flow Information & Present Value

Question 1

The Most relevant measurement of an entity’s liabilities at initial recognition should always reflect?

Answer 1

The Credit Standing of the entity obligated to pay

Question 2

SFAC 7 Using Cash Flow Information and PV in Accounting Measurement covers?

Answer 2

Measurements at Initial Recognition

Interest Method of Amortization

Expected Cash Flow Approach

Question 3

What are the objectives of using present value in accounting measurements?

Answer 3

To Estimate Fair Value

Capture economic differences between future cash flows

Capture elements that taken together would comprise a market price if one existed.