AASB 101's definition of current assets and further discussion at paragraph 59 will:
A) Simplify the recognition of current assets.
B) Require greater professional judgement in order to determine an entity's normal operating cycle.
C) Improve analysts' decisions as ratios which use current assets will use the same information.
D) Have implications for assessing the liquidity of entities as current assets will now include fewer items.
E) None of the given answers.

Question

Quizplus · Accepted Answer

AASB 101's definition of current assets and the discussion at paragraph 59 require greater professional judgement in determining an entity's normal operating cycle, which can impact the classification of assets as current. This means that it may not necessarily simplify recognition, and there may not necessarily be implications for assessing the liquidity of entities as current assets could either increase or decrease depending on an entity's normal operating cycle. While this greater judgement may lead to more precise information, it also means that analysts will need to be more careful in their analysis. Therefore, option B best describes the implications of AASB 101's definition of current assets.

AASB 101's Definition of Current Assets and Further Discussion at Paragraph