Which measurement base uses the discounted future net cash inflows or net cash savings that are expected to arise in the normal course of business in measuring the value of an asset?
A) Historical cost
B) Current cost
C) Present value
D) Realisable value

Question

Quizplus · Accepted Answer

The measurement base that uses the discounted future net cash inflows or net cash savings is present value. This base takes into account the time value of money and provides a more accurate representation of an asset's value in the long term. Historical cost is based on the original cost of acquisition, while current cost is based on the market value of the asset. Realisable value reflects the estimated amount that an asset could be sold for in the current market conditions. None of these measurement bases take into account the discounted future net cash inflows or net cash savings, so the best answer is C.

Which Measurement Base Uses the Discounted Future Net Cash Inflows