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Conceptual Framework: measurement

Measurement

1.1 Measurement bases

The IASB® Conceptual Framework (the Framework) lists the following measurement
bases:

 Historical cost items are recorded at the amount of consideration given at the
time of acquisition.

 Current cost items are carried at the value to be paid to acquire the equivalent
item currently.

 Realisable value items are carried at the amount that could be obtained from
an orderly disposal.

 Present value items are carried at the discounted present value of future cash
flows relating to the item.

1.2 Advantages of financial statements produced using historical cost

Easy to
understand

Objective, free Straightforward
from bias to produce

Advantages

Values can be Gains not
confirmed to recorded until
original invoice realised

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