- 20 Marks
PSAF – L2 – Q4.4 – General purpose financial reporting framework
Explain measurement in financial reporting, its objectives, and appropriate measurement bases for legacy assets in a public hospital.
Question
(a) Unity Regional Hospital has many assets which do not carry value in the books of accounts, termed legacy assets. These legacy assets include land and buildings, motor vehicles, equity investment in a special purpose vehicle, and specialized biomedical equipment. Migrating to an accrual basis requires that these assets be measured and recognized in the financial statement. The major concern of the Director of Finance, Ms. Ama Kweku is how to measure these legacy assets to achieve values that will be agreeable to the Auditor.
Required:
(I) Explain measurement in financial reporting.
(ii) Discuss the objective of measurement that should guide the Director of Finance in the measurement of the legacy assets.
(iii) Explain the appropriate measurement basis for each component of the legacy assets of the hospital.
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