Recognition Criteria:

Recognition Criteria:Recognition is the process of formally recording or incorporating an item in the financial statements of an entity as an asset, liability, revenue, expense or the like.

Four Fundamental Recognition CriteriaDefinitions-The item meets the definition of an element of financial statements.Measurability-A relevant attribute measurable with sufficient reliabilityRelevance-The information about it is capable of making a difference in user decisions.Reliability-The information is representationally faithful, verifiable, and neutralAll Four criteria are subject to a pervasive cost-benefit constraintRecognition is also subject to a materiality threshold.

5 Different Attributes of Assets(and Liabilities)Historical Cost-Property, plant, equipment, and most inventories are reported at the price paid to acquire them.Current Cost-Some investments are reported at their current replacement costs. Current Market Value-Some investments in marketable securities are reported at their current market values which is thee amount of cash attained by selling the asset. Net Realizable (settlement) Value-Short term receivables and some investements are reported at their net realizable value.Present (or discounted) Value of Future Cash Flows-