Definition of Estimation uncertainty


the susceptibility of an accounting estimate & related disclosures to an inherent risk of precision in its measurement.
Sir i cant at all understand this. meaning of precision is like “to arrive at an estimate with precision” but the above sentence says SUSCEPTIBILITY of accounting estimate to a RISK of precision.
Its contradicting sir. i think so. please help. m going crazy over this

1 answer

Ravi Staff April 13, 2017

It simply means chances (risk) that we won’t be able to determine precise amount of estimate because of its nature.
For example estimation uncertainty in high in brand valuation as compared to construction cost.


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