Three statements are given below. A financial item that may be useful to investors is not required to be reported beeau.se the cost of measuring and reporting this information is judged to Ik too great. Timely information that is used to predict future events or provide feedback about prior events is said to possess this characteristic. A quality of information that enables an analyst to evaluate the financial performance of two different companies in the same industry. Give the qualitative characteristic or constraint that is most applicable to each of the statements. Four statements arc given below. Pewtcrschmidt Company values its inventory reported in the financial statements in terms of dollars instead of units. Property, plant, and equipment is recorded at cost (less any accumulated depreciation instead of liquidation value. The accounting records of a company arc kept separate from its owners. The accountant assigns revenues and expenses to specific years before preparing the financial statements. Give the accounting assumption that is most applicable to each of the statements. Four statements arc given below. Quagmire Company recognizes revenue when the goods arc delivered to a customer, even though cash will not be collected from the customer for 30 days. Inventory, which was recently damaged by a flood, is reported at the lower of its cost or market value. Land, located in a desirable location, is reported at the original acquisition price, even though its value has increased by over 100 percent since it was purchased. The cost paid for a delivery truck is recorded as an asset and expensed over the next five years as it is used to help generate revenue.
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