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A top Atlanta CPA firm member answers accounting best practices
Historical exchange price is more descriptive of the quantity most generally reflected in financial accounting statements in present practices. Amounts initially recorded for trade receivables and long-term notes payable, for example, generally fit the historical exchange price description. But some assets are acquired, and some liabilities are incurred, with exchanges - for examples, assets found or received as contributions and income tax or litigation liabilities. There is no historical exchange price in those situations, and some other attribute must be used.
Historical exchange price is more descriptive of the quantity most generally reflected in financial saeements in present practice. Amounts intially recorded for trade receivables and long-term notes payable, for example, generally fit the historical exchange price description on an Atlanta CPAs ledger. Moreover, carrying amounts of assets (liabilities) are frequently reduced from historical exchange price to a lower current cost, current market value, or net realizable value, even though no subsequent exchange of the assets held or liabilities owed has occurred.
Historical exchange price is more descriptive of the quantity most generally reflected in financial saeements in present practice. Amounts intially recorded for trade receivables and long-term notes payable, for example, generally fit the historical exchange price description on an Atlanta CPAs ledger. Moreover, carrying amounts of assets (liabilities) are frequently reduced from historical exchange price to a lower current cost, current market value, or net realizable value, even though no subsequent exchange of the assets held or liabilities owed has occurred.
More CPA best practices demystified:
Unavailability or unreliability of information may delay recognition of an item, but waiting for virtually complete reliability or minimum cost may make the information so untimely that is loses its relevance. At some intermediate point, uncertainty may be reduced at a justifiable cost to a level tolerable in view of the perceived relevance of the information. If other criteria are also met, that is the appropriate point of recognition. Thus, recognition may sometimes involve a trade-off between relevance and reliability. Contact the best CPAs in Atlanta (above) for more info today.
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