The relevance of the reported asset values is linked (with some exceptions such as cash, investments held to maturity, and land) to their primary recognition such as reported expenses. The value of provisions and liabilities on the balance sheet can also affect the quality of income.

Required:

For each of the following give examples and explanations of its effect on cumulative income.

Larger Assets (5 Marks) An undervalued asset (5 Marks) Excessive liabilities or provisions (5 Marks) Underlying liabilities or provisions (5 Marks)