pt 5

Objective

• To provide financial information that is useful to capital providers.

Qualitative Characteristics

• Fundamental

  • Relevance

  • Predictive value

  • Confirmatory value

  • Materiality

  • Faithful Representation

  • Completeness

  • Neutrality

  • Free from Error

• Enhancing

  • Comparability (including consistency)

  • Verifiability

  • Timeliness

  • Understandability

Elements

• Assets

• Liabilities

• Equity

• Investments by owners

• Distributions to owners

• Revenues

• Expenses

• Gains

• Losses

• Comprehensive income

Recognition, Measurement and Disclosure Concepts

Assumptions

• Economic entity

• Going concern

• Periodicity

• Monetary unit

Principles

• Revenue recognition

• Expense recognition

• Mixed-attribute measurement

• Full disclosure

Constraints

• Cost effectiveness

Financial Statements

• Balance sheet

• Income statement

• Statement of comprehensive income

• Statement of cash flows

• Statement of shareholders' equity

• Related disclosures

Role of the Conceptual Framework

• In U.S. GAAP, the framework primarily provides guidance to standard setters to develop high-quality standards.

• In IFRS, the framework guides standard setting and also provides a basis for practitioners to make accounting judgments when another IFRS standard does not apply.

• Convergence between US GAAP and IFRS is ongoing with continued FASB and IASB cooperation.