Conceptual Framework

Conceptual Framework - Provide information that is: Useful...

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Click to edit Master subtitle style 3/20/11 International Accounting Conceptual Frameworks
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3/20/11 Definition A coherent system of interrelated objectives and fundamentals that can lead to consistent rules and that prescribes the nature, function, and limits of: o financial accounting and o financial statements.
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3/20/11 Why is a conceptual framework needed? (FASB) New rules build upon, and relate to, an established body of concepts and objectives New and emerging practical problems can be addressed by referring to existing theory In the US, the SEC recommended
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3/20/11 Why is a conceptual framework needed? (IASB) Development of future IFRS and review of existing IFRS Reduce the number of alternative accounting treatments Assist national standard-setters (e.g., FASB in US) in developing national standards Assist preparers in applying IFRS to general-purpose financial statements
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3/20/11 FASB: Level One ( Basic Objective of Financial
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Unformatted text preview: Provide information that is: Useful in investment and credit decisions Useful in assessing future cash flows About an enterprises: o Resources o Claims to those resources 3/20/11 FASB: Level Two (Qualitative characteristics and Elements) Qualitative characteristics- primary o Relevance Predictive value Feedback value Timeliness o Reliability Verifiability Representational faithfulness 3/20/11 Elements o Assets o Liabilities o Equity o Investment by owners o Distribution to owners o Comprehensive income o Revenues o Expenses o Gains o Losses 3/20/11 FASB: Level Three (Recognition and Measurement) Environmental assumptions o Economic entity o Going concern o Monetary unit o Periodicity Implementation principles o Measurement basis o Revenue recognition o Expense recognition o Full disclosure Informational constraints o Cost-benefit...
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This note was uploaded on 03/19/2011 for the course ACCT 440 taught by Professor Smith during the Spring '11 term at Saginaw Valley.

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Conceptual Framework - Provide information that is: Useful...

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