CFA Practice Question

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CFA Practice Question

In reference to liabilities, the ______ basis of measurement means the undiscounted amount of cash or cash equivalents that would be required to settle the obligation today.
A. current cost
B. settlement value
C. present value
Explanation: On the other hand, in reference to assets, current cost is the amount of cash or cash equivalents that would have to be paid to buy the same or an equivalent asset today.

User Contributed Comments 6

User Comment
shiva5555 Then what is the settlement value?
gaetmichel Current cost = replacement cost
Skrills settlement costs and current costs seem very similar. does anyone know a good way to determine when to use one from the other? the fact that the question says "required to settle" got me
ccanida Settlement value is the amount of cash that could currently be obtained by selling the asset in an orderly disposal
Shaan23 When thinking current cost ---- something should be referred as TODAY or NOW...

Settlement value does not say that -- Instead it says orderly disposal or normal course of business as time period....

Dont get confused with the undiscounted part --- Many people would choose settlement just based on that word and how the text presents it.
choas69 they got me again, in reference to liability.
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