Chapter 2 Conceptual framework - IFRS Conceptual Framework...

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IFRS Conceptual Framework 1
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Learning Objectives Understand the objectives of financial reporting. Identify the qualitative characteristics of accounting information. Define the basic elements of financial statements and the concepts for recognizing and measuring them in financial statements Compare IASB framework and FASB framework. 2
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Primary pronouncements US GAAP 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 SFAC No. 8, Conceptual Framework for Financial Reporting, Chapters 1 (Objective) and 3 (Qualitative Characteristics) supersedes SFAC No. 1 and SFAC No. 2. IFRS IASB, Conceptual Framework for Financial Reporting (September 2010) IAS 8 , Accounting Policies, Changes in Accounting Estimates and Errors 3
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The FASB has stated that, “The concept statements are intended to set forth objectives and fundamental concepts that will be the basis for development of financial accounting and reporting guidelines.” The FASB has also stated that, “The Conceptual Framework is a coherent system of interrelated objectives and fundamental concepts that prescribe the nature, function, and limits of financial accounting and reporting and that is expected to lead to consistent guidance.” Purpose of the concept statements 4
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The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders, and creditors (‘primary users’) in making decisions about providing resources to the entity. Those decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit. Why did the Boards choose to identify the existing and
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Chapter 2 Conceptual framework - IFRS Conceptual Framework...

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