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Chapter 2: Q.2-31FRS (page 76)

Question: What are some of the differences in elements in the IASB and FASB conceptual frameworks?

Short Answer

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Answer

The IASB conceptual framework focus on the creation of financial statements as it looks up toaccomplish the requirements of all the shareholders. Whereas FASB targets financial reporting as its purpose is to provide aid to the investors.

Step by step solution

01

Meaning of Conceptual Framework

A conceptual framework is a linear representationthat assists in demonstrating the estimated relationship between cause and effect in a financial situation.

02

Differences in elements in the IASB and FASB conceptual frameworks

Differences between International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) include:

  • The International Accounting Standards Board (IASB) emerged on April 1, 2001. On the other hand, the Financial Accounting Standards Board (FASB) emerged in 1973.
  • The International Accounting Standards Board (IASB) is situated in London. While Financial Accounting Standards Board (FASB) is situated in the United States.
  • The International Accounting Standards Board (IASB) deals with the advancement of International Financial Reporting Standards and encourages the use of these standards. However, Financial Accounting Standards Board (FASB) is a non-profit entity that serves the advancement of Generally Accepted Accounting Principles (GAAP) in the general interest.
  • The International Accounting Standards Board (IASB) is also known as the beneficiary of the International Accounting Standards Committee. While the Financial Accounting Standards Board (FASB) was substituted by the Accounting Principles Board (APB) and the Committee on Accounting Procedure (CAP).

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Most popular questions from this chapter

Expenses, losses, and distributions to owners are all decreases in net assets. What are the distinctions among them?

Accounting information provides useful information about business transactions and events. Those who provide and use financial reports must often select and evaluate accounting alternatives. The FASB statement on qualitative characteristics of accounting information examines the characteristics of accounting information that make it useful for decision-making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information.

Instructions

a) Describe briefly the following characteristics of useful accounting information.

1. Relevance (4) Comparability

2. Faithful representation (5) Consistency

3. Understandability

b)For each of the following pairs of information characteristics, give an example of a situation in which one of the characteristics may be sacrificed in return for a gain in the other.

1. Relevance and faithful representation.

2. Relevance and consistency.

3. Comparability and consistency.

4. Relevance and understandability.

c) What criterion should be used to evaluate trade-offs between information characteristics?

Do the IASB and FASB conceptual frameworks differ in terms of the role of financial reporting? Explain.

What are the four basic assumptions that underlie the financial accounting structure?

Question: What are some of the costs of providing accounting information? What are some of the benefits of accounting information? Describe the cost-benefit factors that should be considered when new accounting standards are being proposed.
See all solutions

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