The basics of measurement of financial reporting information
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Date
2024
Journal Title
Journal ISSN
Volume Title
Publisher
Ivane Javakhishvili Tbilisi State University Press
Abstract
According to the conceptual basics of financial reporting, the elements of financial reporting are measured
by two time-based measurement systems: Entry price and Exit price systems. The entry price is a “historic
cost”. The exit price reflects the view of market participants in a particular period of measurement and
is thus called “Current Value” .
Current value has become synonymous with Fair value, since it is based on the exit price (the price that
would have been obtained from the sale of an asset or the transfer of a paid liability) and not on the transaction
price or entry price (the price that would have been paid when the assets were purchased or would have
been obtained from taking a liability) Conceptually, the entry price and the exit price are different. While exit
and entry prices may be identical in many situations, it is implied that the transaction price does not represent
the fair value of assets and liabilities upon their initial recognition as measured under IFRS 13.
The disadvantage of the initial value is considered to be that it does not reflect changes in value, except
in the case when the changes are related to the depreciation of the asset, or the liability due to the changes
becomes a loss. Up-to-date information on measurement of the elements of financial reporting can be obtained
at current value, such as fair value, value in use, and fulfillment value.
Description
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Keywords
Citation
IX International Scientific Conference: "Challenges of Globalization in Economics and Business", Proceedings , Tbilisi, 2024, pp. 289-296