Conceptual Framework Phase C — Measurement

Date recorded:

Inventory of measurement bases

The Boards discussed a revised staff analysis of measurement basis candidates, which was prepared after considering comments and other input derived from suggestions made by Board members and Roundtable participants. The discussion focussed on Appendix B in Observer Note 14. The staff analysis re-grouped the array of possible measurement bases of entry and exit prices into broad categories of 'past', 'present' and 'future'. This analysis was represented the original 19 bases presented at the January-February 2007 Roundtables plus three others: modified past entry amount, current equilibrium price, and value in use.


Excerpt from Appendix B of Observer Note 14 Measurement Basis Candidates by Time Frame with Their Variations


  • 1. Past entry price
    • a. Without related costs
    • b. With related costs
  • 2. Modified past entry amount1
    • a. Accumulated
    • b. Allocated
    • c. Amortized
    • d. Combined
  • 3. Past exit price
    • a. Without related costs
    • b. With related costs


  • 4. Current entry price
    • a. Without related costs
    • b. With related costs2
      • i. Identical replacement
      • ii. Identical reproduction
      • iii. Equivalent replacement
      • iv. Productive capacity replacement
  • 5. Current exit price
    • a. Without related costs
    • b. With related costs
  • 6. Current equilibrium price3
  • 7. Value in use


  • 8. Future entry price
    • a. Without related costs
    • b. With related costs
  • 9. Future exit price
    • a. Without related costs
    • b. With related costs

1 Variations of this basis derive from past entry prices with related costs.

2 The four variations of this variation traditionally refer only to assets and assume inclusion of related costs.

3 The notion of related costs does not apply to this basis.

Board members appeared confused about the purpose of the analysis and some had specific misgivings both about the past- present-future split and some of the items included. Some of the confusion was over terminology. For example, it was suggested that 'current equilibrium price' was not far from Level 1 measures in FAS 157 Fair Value Measurements. Others challenged the staff because measurement bases for liabilities had not been considered.

The staff responded that the array was an inventory of potential measurement bases for inputs. As the measurement project progresses, that inventory will be reduced as various measurement bases are eliminated as not appropriate. Some Board members responded to this clarification by saying they thought the rearrangement could be useful.

There was a brief discussion of deprival value and value in use. There seemed to be agreement between the staff and Board members that deprival value was more of a decision tree that helped to determine the appropriate measure rather than a measurement basis itself. The inclusion in the inventory of value in use was an attempt to respond to constituents, many of whom are willing to accept a mixed-measurement model, especially for operating assets.


The staff reviewed the definitions (Observer Note 14 Appendix C). Board members had specific concerns about some aspects of the definitions, especially with respect to the extinguishment of liabilities. However, the staff attempted to reassure the Boards that future meeting papers would help to put all the possible measurement bases in context; the current exercise was an attempt to arrange the inventory in a logical order and add some discipline to it.

Some Board members were uncomfortable with some of the expressions used to describe and explain the bases, for example identifying a 'future cost/proceeds' (see item 8) seemed to confuse measurement with estimation. However, the staff encouraged the Boards to allow them to use the inventory as it had been presented.

The Board agreed.

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