The paper "Liability Measurement Approaches" is a great example of a literature review on finance and accounting. Liabilities are very important in calculating profits for any organization. They are often practiced under AASB/IFRS and have different approaches for measuring as found out by Barth, M. E. (2013). Approaches to measuring liabilities incurred are very essential in any organization since they enable the organization to establish accounting and financial reporting aspects. Measuring liabilities enables auditors in the evaluation of financial statements of any institution (Matsushita, S., 2014). Auditors can ascertain clearly the reported profits from the liabilities incurred.
Measurement approaches are key components in understanding the IFRS/AASB frameworks according to Matsushita, S. (2014). This research will seek to understand the various liability measurement approaches using a selected annual report. Two IASB/AASB accounting standards will be discussed. The research will suggest various liability measurement approaches that can be used in different organizations in Australia. The comments on the liability measurement approach adopted in the annual report will be given. INTRODUCTION The liability measurement concept is very important in ascertaining the reported profits for any entity.
This research paper will determine the approaches to measuring liabilities. The standards of IFRS/AASB will be used to provide the concept of liability measurement. IFRS/AASB accounting standards provide multiple diverse methods of measuring liabilities for organizations (Matsushita, S., 2014). However, the methods tend to change regularly with no consistency. However, various methods project the value of liabilities to be incurred in the future. There are different implications of accounting standards while measuring and recognizing liabilities for companies. Different theories have been used to explain liability measurement approaches such as the conservatism theory (Barth, M.
E., 2013). However it is important to understand that measurement approaches do not apply to all liabilities, and that is why it is important to apply the theory of conservatism in liability measurement approaches as claimed by Matsushita, S. (2014).
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