Question

What are the possible circumstances that provide questionable sufficiency of faithful representation because the level of measurement uncertainty is high?

a) Fair value measurements
b) Historical cost measurements
c) Extremely rare cases
d) Routine transactions

Answer 1

The possible circumstances that provide questionable sufficiency of faithful representation due to high level of measurement uncertainty include fair value measurements and extremely rare cases. Historical cost measurements and routine transactions may have lower level of measurement uncertainty.

Step-by-step explanation:

The possible circumstances that provide questionable sufficiency of faithful representation due to high level of measurement uncertainty include:

1. Fair value measurements: Fair value measurements involve estimating the current market value of an asset or liability, which can be challenging when there is high measurement uncertainty.
2. Extremely rare cases: In extremely rare cases, there may be limited historical data or benchmarks available to measure and represent certain transactions accurately.

Both fair value measurements and extremely rare cases can introduce measurement uncertainty, making the sufficiency of faithful representation questionable. On the other hand, historical cost measurements and routine transactions may have lower level of measurement uncertainty, therefore providing more reliable representations.