An Example of Where the Prudence Assumption Leads to a Reduction

question 60

Multiple Choice

An example of where the prudence assumption leads to a reduction in the valuation of an asset is:

• A)development expenditure capitalised as an asset rather than written off as an expense.
• B)taking an upward revaluation of an asset to a reserve rather than including it in the profit calculation.
• C)valuing inventory at the lower of cost and net realisable value.
• D)All are examples.

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Definitions:

Crest Poles

Crest poles, more commonly referred to as totem poles, are monumental sculptures carved from trees by Indigenous peoples of the Pacific Northwest coast of North America, featuring a series of crests representing clan lineage, rights, and stories.

Métis

People indigenous to North America whose background is Aboriginal and European ancestry.

French-Canadian

Pertaining to individuals of French descent who are residents of Canada, particularly in the province of Quebec.

Indigenous

Pertaining to the original inhabitants of a region, having unique traditions, cultures, and ties to the land prior to colonization or annexation.