Flashcards in IASB Framework Deck (14):
What is the IASB's Framework for the Preparation and Presentation of Financial Statements (Framework)?
Similar to the FASB's concepts statements, but much shorter. This does not constitute GAAP, but rather provides a basis for development of specific GAAP on a consistent basis. Intended to apply to financials of all entities.
In what cases can the IASB's Framework for the Preparation and Presentation of Financial Statements (Framework) be used GAAP?
1.) In rare cases where the IASB Framework is in conflict with an accounting standard for compelling practical reasons, the standard is used as guidance
2.) In cases where no applicable accounting exists, the IASB framework may be considered as guidance for GAAP.
What are the purposes of the IASB Framework?
1.) To assist the board in developing new IASs and reviewing existing IASs
2.) Assist the board in promoting harmonization of standards by providing a basis for reducing the number of alternative accounting treatments
3.) To assist national standard-setting bodies in developing standards
4.) Assist preparers in applying IASs and dealing with topics not yet covered by IASs
5.) Assist auditors in forming an opinion as to whether financial statements conform with IASs
6.) Assist users in interpreting financial statements prepared in conformity with IASs
7.) To provide information for parties interested in the work of the IASB
What are the 5 elements in the IASB Framework?
Difference: IASB Framework only lists half of the elements in the FASB Framework. Does not include Investments by owners, distributions to owners, comp income, gains, and losses.
What are the requirements something needs to be recognized as an element by the IASB Framework?
Needs to meet one of the element definitions (Asset, etc.) and one of the recognition criteria:
1.) Probable that a future economic benefit associated with the item will flow to or from the entity
2.) Item has a cost or value that can be measured with reliability
IASB definition of an Asset?
Resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity
IASB definition of a Liability?
Present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying future benefits
IASB definition of Equity?
Residual interest in the asset after subtracting liabilities
IASB Definition of Income
Increases in economic benefits deriving from increases in assets or decreases in liabilities that result in increases in equity. Gains are not treated as separate elements because they also may be due to ordinary activities.
What is the difference between IASB and FASB Framework for Income?
IASB includes both revenues and gains, whereas FASB treats "revenue" and "gains" as separate items.
What is the difference between IASB and FASB Framework for Expenses?
IASB includes losses whereas FASB treats "expenses" and "losses" as separate items
What are the 2 underlying assumptions for IASB framework?
1.) Financial Statements are prepared on the accrual basis
2.) The entity is a going concern.
Accrual accounting is not an assumption in the FASB framework
What is meant by a "Reliable Measurement?"
Measurement in which a reasonable estimate is made