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:

Visual Feedback

Information provided visually that informs the user or viewer about the outcomes of actions, responses, or changes in the environment or system.

Videotape

A magnetic tape used for recording and replaying visual and audio information, now largely obsolete due to digital media.

Facial Reactions

Expressive movements of the face that communicate emotional states or reactions to stimuli.

Discourse Analysis

The study of how texts and spoken language are used in social contexts to enact identities and social structures.