RECOGNITION AND MEASUREMENT OF ASSETS AND LIABILITIES

1. 
RECOGNITION ANDMEASUREMENT OF ASSETSAND
LIABILITIES.
Impana S.
I M.com
Under the guidance of
Sundar B. N.
Asst. Prof. & Course Co-ordinator
GFGCW, PG Studies in Commerce
Holenarasipura

2. 
ASSETS
 Meaning of Assets
 Recognition of Assets
 Measurement of Assets
LIABILITIES
 Meaning of Liabilities
 Recognition of Liabilities
 Measurements of Liabilities
CONCLUSION
REFERENCE
Content

3. 
ASSETS

4. 
Meaning of Assets
 An asset is anything of value or a resource of value that
can be converted into cash.
 Individuals, companies, and governments own assets.
 For a company, an asset might generate revenue, or a
company might benefit in some way from owning or
using the asset.
 An asset is something containing economic value and/or
future benefit.
 An asset can often generate cash flows in the future, such
as a piece of machinery, a financial security, or a patent.

5. 

6. 
Recognition of Assets
Recognition criteria
 The future economic benefits must be probable.
 The asset must be capable of being measured
reliably.
Past recognition criteria
 Reliance on the law.
 Determination of economic substance of the
transaction or event.
 Use of the conservatism principle: Anticipate losses
but not gains.

7. 

8. 
Measurements of
Assets
Some terms used for valuation of assets.
Historical Cost:
 The amount of cash paid to acquire an asset.
Current Replacement:
 The amount of cash that would have been paid to
acquire currently the best asset available in the
market.
Net Realizable Value:
 The amount of cash expected to be derived from sale
of an asset.

9. 
Measurements of Assets
Continue…
Net Present Value:
 This is equal to expected future cash inflows—cash
outflows i.e. net cash flows. Thus for the purpose of
valuation of assets, we have four bases and our choice
will depend upon what particular aspect of asset is to be
measured.
 If accountant is interested to measure the number of
monetary units spent for acquiring the asset, he can use
historical cost, on the other hand if his choice is to
measure the physical aspect of the asset or its replacement
aspect, he should use present value or replacement value.

10. 
LIABILITIES

11. 
 A liability is something a person or company owes,
usually a sum of money.
 Liabilities are settled over time through the transfer
of economic benefits including money, goods, or
services.
 A liability can also mean a legal or regulatory risk or
obligation.
 In corporate accounting, companies book liabilities
in opposition to assets.
Meaning of Liabilities

12. 
A liability is recognized in the balance sheet when it is
probable that an outflow of resources embodying
economic benefits will result from the settlement of a
present obligation and the amount at which the
settlement will take place can be measured reliably.
Recognition of Liabilities

13. 
Measurements of Liabilities
 In conformity with cost principle.
 On creation the amount of liability equals market
value.
 Liability valued at
Historical cost
Present value and discounted net asset.
 Valuation and recognition is necessary for income
distribution and capital maintenance.
 Required to calculate the financial position.
 If not recorded expenses have not been fully
recorded under statement of expenses and over
statement of income.

14. 
 The reports of assets and liabilities of the DLAs will
be tabled in the next summit meeting for adoption
and implementation.
 IGRTC started the Identification, verification,
validation, and transfer of assets and liabilities
attendant to the devolved functions.
CONCLUSION

15. 
 Assets meaning and recognition (Retrieved form,
https://www.Britannica.com – 16/8/2021
 Liabilities meaning and recognition (Retrieved from,
https://www.wiki accounting.com – 16/8/2021
 Assets measurements (Retrieved from,
https://www.wiki accounting.com – 16/8/2021
 Liabilities measurements (Retrieved from,
https://www.wiki accounting.com – 16/8/2021
REFERENCE

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