Theoretical FrameworkQ-3 | Accounting as a Measurement DisciplineQuestion 4650 of 110
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Detailed Solution & Explanation

Realisable Value:  As per realisable value, assets are carried at the amount of cash or equivalent that could currently be obtained by selling the assets in an orderly disposal. Haphazard disposal may yield something less.  Liabilities are carried at their settlement values; ie, the undiscounted amounts of cash or cash equivalents expressed to be paid to satisfy the liabilities in the normal course of business. Example: (1) Suppose 'Ram' found that he can get 14,00,000 if he would sell the building purchased on 1.1.2005. So the building should be recorded at 14,00,000 the realisable value in an orderly sale. (2) Take also that 'Ram' found that he had no money to pay off the bank loan currently and will pay in the normal course. So the bank loan should be recorded at ₹ 4,00,000 the settlement value in the normal course of business.

About This Chapter: Theoretical Framework

Paper

Paper 1: Accounting

Weightage

5-10%

Key Topics

Policies, Standards (Ind AS), Vocabulary

This chapter covers Policies, Standards (Ind AS), Vocabulary and is part of Paper 1: Accounting in the CA Foundation exam.

View Official ICAI Syllabus

Exam Strategy Tip

This topic carries 5-10% weightage. Focus on understanding core concepts rather than memorizing.

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