Initial Measurement vs. Subsequent Measurement

Attribute	Initial Measurement	Subsequent Measurement
Timing	At the time of acquisition or recognition	After initial recognition, at subsequent reporting dates
Basis	Cost or fair value	Cost model or revaluation model
Adjustments	No adjustments are made	Adjustments may be made for changes in fair value or depreciation
Frequency	One-time event	Regularly occurring at reporting dates

Definition

Initial measurement and subsequent measurement are two important concepts in accounting that are used to determine the value of assets and liabilities. Initial measurement refers to the process of determining the value of an asset or liability when it is first recognized in the financial statements. Subsequent measurement, on the other hand, refers to the process of determining the value of an asset or liability after it has been initially recognized.

Attributes

When it comes to initial measurement, the value of an asset or liability is typically based on its cost. This means that the value is determined based on the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire the asset or incur the liability. On the other hand, subsequent measurement can be based on various methods such as historical cost, fair value, or the lower of cost or market value.

Frequency

Initial measurement is a one-time event that occurs when an asset or liability is first recognized in the financial statements. This means that the value determined during the initial measurement process will be used as the basis for subsequent measurements. Subsequent measurement, on the other hand, can occur multiple times throughout the life of an asset or liability. This is because the value of an asset or liability may change over time due to various factors such as market conditions or changes in the company's operations.

Methods

There are different methods that can be used for initial measurement and subsequent measurement. For initial measurement, the cost method is commonly used to determine the value of assets and liabilities. This method involves recording the value of an asset or liability at the amount of cash or cash equivalents paid or the fair value of other consideration given. Subsequent measurement, on the other hand, can be done using methods such as the historical cost method, the fair value method, or the lower of cost or market value method.

Implications

The implications of initial measurement and subsequent measurement can have a significant impact on a company's financial statements. The value determined during the initial measurement process will be used as the basis for subsequent measurements, which can affect the company's reported financial position and performance. It is important for companies to carefully consider the methods used for initial measurement and subsequent measurement to ensure that the values reported in the financial statements are accurate and reliable.

Conclusion

In conclusion, initial measurement and subsequent measurement are two important concepts in accounting that are used to determine the value of assets and liabilities. While initial measurement is a one-time event that occurs when an asset or liability is first recognized in the financial statements, subsequent measurement can occur multiple times throughout the life of an asset or liability. The methods used for initial measurement and subsequent measurement can have a significant impact on a company's financial statements, so it is important for companies to carefully consider the implications of these concepts.