Financial Statements Should Provide Information That Is Both Relevant and Reliable.The

question 22

Essay

Financial statements should provide information that is both relevant and reliable.The current model upon which financial statements are based is the historical cost model.Over the past fifty years,however,various individuals and groups have advocated the implementation of current value models of accounting.One such model represents the amount of cash for which an asset might be sold or a liability might be refinanced,sometimes referred as the current-exit-price approach.The current exit price is generally agreed to correspond (1)to the selling price under conditions of orderly rather than forced liquidation,and (2)to the selling price at the time of measurement.All assets and liabilities are thus revalued at their exit prices at each reporting date.
Required:
Evaluate the historical cost and current-exit-price models in terms of relevance and reliability.

---

Definitions:

Goal Setting

The process of establishing desired results that guide and direct behavior.

Notion Of Entitlement

A concept referring to an individual's or group's belief that they inherently deserve certain rights, privileges, or treatments.

Individual Reward Systems

Are incentive plans and benefits tailored to recognize and reward the performance and achievements of a single person within an organization.

Team Reward Systems

Mechanisms designed to provide incentives or rewards to a group of individuals working together towards common goals.