Under the Framework,the statement that is correct is:
A) Equity is defined independently of assets and liabilities
B) The recognition criteria of probability and measurability apply to equity
C) The measurement of equity depends on the basis of measurement employed for assets and liabilities
D) All of the statements are correct

Question

Quizplus · Accepted Answer

The correct statement is that the measurement of equity depends on the basis of measurement employed for assets and liabilities. This means that the value of equity can fluctuate based on changes in the value of assets and liabilities. Option A is incorrect because equity is defined in relation to assets and liabilities - it represents the residual interest in the assets of an entity after deducting liabilities. Option B is incorrect because recognition criteria do not apply to equity - equity is recognized in the financial statements automatically once assets and liabilities are recognized. Therefore, option D is also incorrect.

Under the Framework,the Statement That Is Correct Is