Lognormal frequency distribution and Recognition: Difference between pages

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A lognormal distribution is one where the logarithm - for example log(X) or ln(X) - of the variable is normally distributed.  
''Financial reporting''.


Lognormal distributions have a minimum - usually 'worst case' - value, whilst having an infinitely high upside.
Recognition is the identification and inclusion of an item in one or more of a  
:(i) balance sheet,
:(ii) income statement,
:(iii) statement of changes in equity or
:(iv) cash-flow statement.


A simplified illustration is set out below.


Certain items which are not recognised and incorporated into any of these four statements may still be disclosed in the accompanying notes to the financial statements.


A simple (non-symmetrical) lognormal distribution includes the following values:


0.01, 0.1, 1, 10 and 100.
== See also ==
 
The median - the mid-point of the distribution - being 1.
 
 
This distribution is skewed: most of the values being in the lower (left) part of the distribution, the upside being infinitely high, and the downside limit being 0.


The logs - for example to the base 10 - of these values are:
*[[Balance sheet]]
*[[Derecognition]]
*[[Disclosure]]
*[[IAS 39]]
*[[IFRS 15]]
*[[Income statement]]
*[[Notes]]
*[[Profit]]
*[[Realisation]]
*[[Statement of cash flows]]
*[[Statement of changes in equity]]


log(0.01), log(0.1), log(1), log(10) and log(100)
[[Category:Accounting,_tax_and_regulation]]
 
[[Category:The_business_context]]
= -2, -1, 0, 1 and 2.
 
 
When the parent values are lognormally distributed, the transformed (log) values follow a (symmetrical) normal distribution.
 
So for example the mean, mode and median of the log values above (including -2, -1, 0, 1 and 2) would all be the same, namely the middle value 0.
 
 
== See also ==
* [[Frequency distribution]]
* [[Leptokurtic frequency distribution]]
* [[Lognormally distributed share returns]]
* [[Median]]
* [[Normal frequency distribution]]

Revision as of 11:07, 29 October 2020

Financial reporting.

Recognition is the identification and inclusion of an item in one or more of a

(i) balance sheet,
(ii) income statement,
(iii) statement of changes in equity or
(iv) cash-flow statement.


Certain items which are not recognised and incorporated into any of these four statements may still be disclosed in the accompanying notes to the financial statements.


See also

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