3. Measurement and Adjustments
Decide which amount belongs at the reporting date
3. Measurement and Adjustments
A trial balance can agree while assets, liabilities and profit remain wrong. Measurement asks what amount belongs now.
| Chapter | Northstar question | Main judgement |
|---|---|---|
| Revenue | How much of a bike-and-service bundle is earned? | Performance obligations and timing |
| Inventory | Which costs remain in unsold bikes? | Cost formula and recoverability |
| Receivables | How much will customers probably pay? | Forward-looking credit loss |
| PPE | How is a production asset consumed? | Components, life and impairment |
| Intangibles | When does app development become an asset? | Identifiability and recognition gates |
| Leases | What asset and obligation arise from warehouse use? | Lease term and discount rate |
| Income tax | Why do accounting and tax timing differ? | Tax bases and temporary differences |
The common pattern
For every topic:
- identify the unit of account;
- state the recognition trigger;
- choose the measurement basis;
- calculate the closing carrying amount;
- record the change;
- disclose estimation uncertainty where material.
Scope
These are teaching summaries, not substitutes for a complete standard or jurisdiction-specific advice. Each page links to primary standard-setting material and labels IFRS/US GAAP differences.