Q. Explain about Predictive value and feedback value?
Several suggest using a different valuation basis such as current cost in reporting such assets. Predictive value and feedback value Since actions taken now are able to affect only future events information is clearly relevant when it possesses predictive value or improves users' abilities to predict outcomes of events. Information that reveals the relative accomplishment of users in predicting outcomes possesses feedback value. Feedback reports on past activities and is able to make a difference in decision making by (a) reducing uncertainty in a situation (b) refuting or confirming prior expectations and (c) providing a basis for further predictions. For instance a report on the first quarter's earnings of a company reduces the uncertainty surrounding the amount of such earnings refutes or confirms the predicted amount of such earnings as well as provides a possible basis on which to predict earnings for the full year. Remember that even though accounting information may possess predictive value it doesn't consist of predictions. Making predictions is a function performed by the decision maker.