Permata_ayu_w@yahoo.co.

id

MEASUREMENT OF
ASSET AND
LIABILITIES

Permata Ayu W
Berwin rahayu
University of airlangga
Accounting derpartement
SUBJECTIVE VALUE
Three problem that faced by manager:
1) Expansion problem
2) Composition problem
3) Financing problem

Usually, those plans may extend far into

the future. So needs adjusment.
What value for assets and liabilities
should be employed that will be
relevant and reliable to managers,
investor and creditors?
TRUE ECONOMINC VALUE
Actually, the most usefull value would be
“true economic value. Unfortunetly, we are
not capable of measure it since this value is
subjective concept.
COST
 Cost is the sacrifice incurred in economic
activities- that which is given up or forgone
to consume, to save, to exchange, to
produce.

 What is the cost of my college education?

 College vs. Work
VALUE
 Value refers to a relationship between a
person or entity and an economic object.
 Relates to the consumer’s willingness to give
up something to obtain the given item.

 Neoclassical econimic theory

value of agood is equal to the satisfaction
received by a person from the last unit
consumed
APPROXIMATION OF TRUE
VALUE
Present value
 Factors must considered in determining
present value:
a) Future cash amount
b) Discount rate
c) Length of time
 People tend to receive money now rather
than later

 In the present value, the quantity of money

is different but the value is the same.
Because there is a time dimension to the
value of money.

 This principle is used to make project

decison.
COMENT
 Irving fisher (1906), macmillian (1930): net
present value is the most suitable way for
measuring asset

 Canning (1929): net present value is the true

value because it consider value of the money
because time passed by.