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4 Cards in this Set
- Front
- Back
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Define: Reserve Recognition Accounting |
The application of present value accounting when ideal conditions do NOT exist. Revenue recognized as reserves are proved, uses average oil and gas prices for the CURRENT period |
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What is a Critique of RRA (Reserve Recognition Accounting) |
Estimates need in order to apply it. Estimates inherently subject to error and bias, and need major adjustments. |
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Explain the trade off between Relevance and Reliability. |
In order to increase relevance, more estimates are required. As the number of estimates increases, reliability decreases. |
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Describe the mixed measurement model |
- Use current value for A/R, Financial Instruments, A/P, and benefits - Use Historical Value for Inventory, PP&E, and Goodwill |
