Recognition

• What should be included in the financial statements?

• Should only include items that:

  1. We can define,

  2. we can measure,

  3. are relevant, and

  4. we can measure reliably.

Measurement

• What system of measuring do we use?

• We can choose from:

  1. Historical cost, 

  2. net realizable value,

  3. current cost,

  4. present value, and

  5. fair value.

Disclosure

• Where do we put the measured information in the financial statements?

• Potential disclosure options:

  1. Parenthetical comment,

  2. notes to the financial statements,

  3. supplemental schedules and tables.