2 Conceptual Framework For Financial Reporting
2 Conceptual Framework For Financial Reporting
2 Conceptual Framework For Financial Reporting
Learning Objectives
• State the basic purpose, authoritative status, and scope of
the Conceptual Framework.
• State the objective of financial reporting.
• Identify the primary users of financial statements.
• Explain briefly the qualitative characteristics of useful
information and how they are applied in financial
reporting.
• Define the elements of financial statements and state their
recognition criteria.
• Only the common needs of primary users are met by the financial
statements.
• means the ability to bring together for the purpose of noting points
of likeness and difference. Comparable information presents
similarities and dissimilarities. Comparability may be made within
an entity or across entities.
Performance
1. Income – encompasses both (a) revenues and (b) gains
2. Expense – encompasses both (b) expenses and (losses)
• Recognition:
a. Only items that meet the definition of an asset, a liability or equity
are recognized in the statement of financial position
b. Only items that meet the definition of income or expense are
recognized in the statement of financial performance
c. The said items are recognized only when their recognition provides
users of financial statements with information that is both relevant
and faithfully represented.
a. Fair value
b. Value in use for asset
c. Fulfillment value for liability
d. Current cost
• Is the present value of the cash flows than an entity expects to derive
from the use of an asset and from the ultimate disposal.
• Exclude transaction costs.