What is conservatism?
CONSERVATISM
Historically, conservatism has described a preference for financial reporting such "that possible errors in measurement be in the direction of understatement rather than overstatement of net income and net assets.". Conservatism is the basis for the practice of reporting certain assets at the lower of acquisition cost or fair value. The requirement to test assets for impairment and to record impairment charges rests on the notion that balance sheet carrying values of assets should not exceed the amount of cash that the firm expects to receive by using or selling the asset. Acquisition cost measurement combined with impairment testing thus provides conservative (that is, lower) asset balance sheet values, because possible measurement errors of assets will be in the direction of understatements. Conservatism interacts with reliability, because the firm measures impaired assets at fair value, which it often bases on an estimate that it cannot verify with an invoice or a contract.
You might also like to view...
Negotiators in a multiparty negotiation can explicitly engage in ________ building as a way to marshal support.
Fill in the blank(s) with the appropriate word(s).
Because of the nature of the service desk industry, the trend is for service desks to continue to be stepping stones to other professions.
Answer the following statement true (T) or false (F)
A new employee is hired and discovers that she is the first employee who does not match the characteristics of the dominant social group. Given the typical reported experiences of others, what can this new employee likely expect?
a. jealousy by others of the dominant social group b. early termination c. special privileged treatment by others d. less respect from others
Direct mail is often used for all of the following except?
a. Produce prospective customer leads b. Sell to existing customers c. Enhance customer relationships d. Terminate relationships with bad customers