Limitation of the Statement of Financial Position - Economics, Accounting, and Tax ( ECOTAX )

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Friday, October 31, 2014

Limitation of the Statement of Financial Position

   Some of the major limitations of financial position are :

1.      Most asset and liabilities are reported at historical cost. As a result, the information provided in the statement of financial position is often criticized for not reporting a more relevant fair value.

2.      Companies use judgments and estimates to determine many of the the items reported in the statement of financial position.


3.      The statements of financial statement position necessarily omits many items that are of financial value but that a company cannot record objectively. 

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