14 Questions
Which statement is true about the total carrying amount of equity?
It is the total of recognized assets minus recognized liabilities.
What is the relationship between the total carrying amount of equity and the market value of equity claims on the entity?
They are generally equal except in some circumstances.
Can the total carrying amount of equity be negative?
Yes, depending on the measurement of assets and liabilities.
Which measurement basis is used when applying cash-flow-based measurement techniques?
Fair value
What is one factor to consider when measuring an asset or liability by reference to estimates of uncertain future cash flows?
Possible variations in the estimated amount or timing of those cash flows
What does the expected value reflect when measuring an asset or liability by reference to estimates of uncertain future cash flows?
The entire range of outcomes and gives more weight to the outcomes that are more likely
What information does a central estimate provide when measuring an asset or liability by reference to estimates of uncertain future cash flows?
An estimate based on future cash flows and possible variations in their amounts or timing
Which of the following statements is true about the total carrying amount of equity?
It equals the total of the carrying amounts of all recognized assets.
What is the total carrying amount of equity measured as?
A residual
Under what circumstances can the total equity be negative?
When the total carrying amount of recognized assets is greater than the total carrying amount of recognized liabilities.
Which measurement basis is used when applying cash-flow-based measurement techniques?
Fulfilment value
Which one of the following is NOT a characteristic of outcome uncertainty?
Price for bearing uncertainty
What does the maximum amount that is more likely than not to occur indicate?
The probability of a subsequent gain is no more than 50%
What information does a central estimate provide when measuring an asset or liability by reference to estimates of uncertain future cash flows?
The single most likely ultimate inflow or outflow
Test your knowledge on equity measurement and its relationship to an entity's value in financial statements. Learn why the total carrying amount of equity may not necessarily match the aggregate market value.
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