Constraints and Present Value

Question 1

In conservatism a constraint or a qualitative characteristic?

Answer 1

-No neither

Question 2

If estimates of an outcome are not equally likely, what is the preferred approach?

Answer 2

-Report the most likely estimate rather than the more conservative

Question 3

What are the recognition and measurement criteria?

Answer 3

• Definition
• Measurability
• Relevance
• Faithful Representation

Question 4

When a present value measure is used, what is the preferred approach and why?

Answer 4

-Expected cash flow because it reflects uncertainties inherent in estimated cash flows