chapter 2 - IFRS - Conceptual framework Executive summary...

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Conceptual framework
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Conceptual framework Page 2 Executive summary Standards are going to become more principles based and less prescriptive in nature. IASB emphasizes: Qualitative characteristic of substance over form Accrual basis of accounting Going concern concept Capital maintenance concept FASB emphasizes the use of the cash flow statement and present value principles. Through the Norwalk Agreement and convergence projects, the FASB and IASB are beginning to converge concepts. The convergence process will be time consuming and face many challenges.
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Conceptual framework Page 3 Primary pronouncements US GAAP SFAC No. 1, Objectives of Financial Reporting by Business Enterprises SFAC No. 2, Qualitative Characteristics of Accounting Information SFAC No. 5, Recognition and Measurement in Financial Statements of Business Enterprises SFAC No. 6, Elements of Financial Statements SFAC No. 7, Using Cash Flow Information and Present Value in Accounting Measure IFRS IASB , Framework for the Preparation and Presentation of Financial Statements IAS 8 , Accounting Policies, Changes in Accounting Estimates and Errors
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Conceptual framework Page 4 Overview Objectives FASB Useful to investors and creditors Assessing cash flow Economic resources IASB Meets needs of most investors Present financial position, performance and changes in financial position Stewardship of management
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Conceptual framework Page 5 Differences Objectives FASB and IASB Similar objectives. Definitional differences with respect to users of financial statements and actual definition of financial statements.
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Conceptual framework Page 6 Overview Qualitative characteristics FASB Understandability Relevance: Predictive and feedback value Timeliness Reliability: Verifiability Representational faithfulness Neutrality Comparability (consistency) Materiality IASB Understandability Relevance Reliability: Faithful representation Neutrality Comparability Materiality Substance over form Prudence Completeness Constraints
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Conceptual framework Page 7 Differences Qualitative characteristics FASB Both have similar characteristics identified, but there are some different views expressed by the respective boards. Substance over form is not mentioned.
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This note was uploaded on 12/29/2009 for the course ACC 5100 taught by Professor Andrews during the Fall '09 term at Wayne State University.

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chapter 2 - IFRS - Conceptual framework Executive summary...

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