Measuring and reporting assets using historical cost is most relevant in satisfying:
A) the stewardship objective of financial reporting
B) the decision usefulness objective of financial reporting
C) the objectives of relevance and reliability in financial reporting
D) both A and B

Question

Quizplus · Accepted Answer

Measuring and reporting assets using historical cost is most relevant in satisfying the stewardship objective of financial reporting, which is to provide information about how effectively and efficiently management has used the resources entrusted to them. Historical cost reflects the actual amount paid for the asset at the time of acquisition, and provides a reliable basis for measuring and reporting asset values over time. While historical cost is also relevant to the decision usefulness objective of financial reporting, the primary focus of this objective is on providing information that helps users make decisions about investing in or lending to an entity.

Measuring and Reporting Assets Using Historical Cost Is Most Relevant