QUESTION 2

Compare and contrast measurement using historical cost and fair value. You should address the following issues for each method.

(i) Outline whether it involves fundamental or derived measurement. (4 marks)

(ii) Outline two benefits or strengths of each measurement base. (4 marks)

(iii)Outline two limitations of each measurement base. (4 marks)

(iv)Outline which objective of accounting (as per Conceptual Framework) is it closely related to. (3 marks