Beruflich Dokumente
Kultur Dokumente
Intermediate Accounting
IFRS 2nd Edition
Kieso, Weygandt, and Warfield
2-1 2-2
1. Describe the usefulness of a 5. Define the basic elements of financial ► Rule-making should build on and relate to an established
conceptual framework. statements.
body of concepts.
2. Describe efforts to construct a conceptual 6. Describe the basic assumptions of
framework. accounting.
► Enables IASB to issue more useful and consistent
3. Understand the objective of financial 7. Explain the application of the basic principles
reporting. of accounting. pronouncements over time.
4. Identify the qualitative characteristics of 8. Describe the impact that the cost constraint
accounting information. has on reporting accounting information.
2-3 2-4 LO 1
2 Conceptual Framework
WHAT’S YOUR PRINCIPLE?
rule interpretation. Enron’s financial engineers were able to structure 2. Describe efforts to construct a 6. Describe the basic assumptions of
conceptual framework. accounting.
transactions to achieve a desired accounting treatment, even if that accounting
3. Understand the objective of financial 7. Explain the application of the basic principles
treatment did not reflect the transaction’s true nature. Under principles-based of accounting.
reporting.
rules, hopefully top management’s financial reporting focus will shift from 8. Describe the impact that the cost constraint
4. Identify the qualitative characteristics of
demonstrating compliance with rules to demonstrating that a company has accounting information. has on reporting accounting information.
2-7 LO 2 2-8 LO 2
ASSUMPTIONS PRINCIPLES CONSTRAINTS
2 Conceptual Framework
1. Economic entity 1. Measurement 1. Cost
2. Going concern 2. Revenue recognition
Third level
3. Monetary unit
4. Periodicity
3. Expense recognition
4. Full disclosure
The "how"—
implementation for Financial Reporting
5. Accrual
QUALITATIVE
CHARACTERISTICS ELEMENTS
LEARNING OBJECTIVES
1. Fundamental 1. Assets
qualities 2. Liabilities Second level After studying this chapter, you should be able to:
2. Enhancing 3. Equity Bridge between
qualities 4. Income 1. Describe the usefulness of a conceptual 5. Define the basic elements of financial
levels 1 and 3
5. Expenses framework. statements.
ILLUSTRATION 2-7
Conceptual Framework 2. Describe efforts to construct a conceptual 6. Describe the basic assumptions of
for Financial Reporting OBJECTIVE framework. accounting.
Provide information
about the reporting 3. Understand the objective of financial 7. Explain the application of the basic principles
entity that is useful reporting. of accounting.
to present and potential First level
4. Identify the qualitative characteristics of 8. Describe the impact that the cost constraint
equity investors, The "why"—purpose has on reporting accounting information.
lenders, and other accounting information.
of accounting
creditors in their
capacity as capital
2-9 providers. 2-10
2
FIRST LEVEL: BASIC OBJECTIVE Conceptual Framework
for Financial Reporting
OBJECTIVE
“To provide financial information about the reporting entity
LEARNING OBJECTIVES
that is useful to present and potential equity investors,
lenders, and other creditors in making decisions about After studying this chapter, you should be able to:
1. Describe the usefulness of a conceptual 5. Define the basic elements of financial
providing resources to the entity. framework. statements.
2. Describe efforts to construct a conceptual 6. Describe the basic assumptions of
framework. accounting.
" Provided by issuing general-purpose financial statements.
3. Understand the objective of financial 7. Explain the application of the basic principles
" Assumption is that users need reasonable knowledge of business reporting. of accounting.
and financial accounting matters to understand the information. 4. Identify the qualitative characteristics 8. Describe the impact that the cost constraint
of accounting information. has on reporting accounting information.
2-11 LO 3 2-12
SECOND LEVEL: FUNDAMENTAL CONCEPTS SECOND LEVEL: FUNDAMENTAL CONCEPTS
2-13 LO 4 2-14 LO 4
ILLUSTRATION 2-7
Conceptual Framework
for Financial Reporting
2-15 LO 4 2-16 LO 4
SECOND LEVEL: FUNDAMENTAL CONCEPTS SECOND LEVEL: FUNDAMENTAL CONCEPTS
Financial information has predictive value if it has value as an input to Relevant information also helps users confirm or correct prior
predictive processes used by investors to form their own expectations expectations.
about the future.
2-17 LO 4 2-18 LO 4
ILLUSTRATION 2-7
Conceptual Framework
for Financial Reporting
Faithful representation means that the numbers and descriptions Completeness means that all the information that is necessary for
match what really existed or happened. faithful representation is provided.
2-21 LO 4 2-22 LO 4
Neutrality means that a company cannot select information to favor An information item that is free from error will be a more accurate
one set of interested parties over another. (faithful) representation of a financial item.
2-23 LO 4 2-24 LO 4
SECOND LEVEL: FUNDAMENTAL CONCEPTS SECOND LEVEL: FUNDAMENTAL CONCEPTS
Information that is measured and reported in a similar manner for Verifiability occurs when independent measurers, using the same
different companies is considered comparable. methods, obtain similar results.
2-25 LO 4 2-26 LO 4
Timeliness means having information available to decision-makers Understandability is the quality of information that lets reasonably
before it loses its capacity to influence decisions. informed users see its significance.
2-27 LO 4 2-28 LO 4
2 Conceptual Framework
for Financial Reporting Basic Elements
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the usefulness of a conceptual 5. Define the basic elements of financial
framework. statements. ILLUSTRATION 2-7
2. Describe efforts to construct a conceptual Conceptual Framework
6. Describe the basic assumptions of
framework. for Financial Reporting
accounting.
3. Understand the objective of financial 7. Explain the application of the basic principles
reporting. of accounting.
4. Identify the qualitative characteristics of 8. Describe the impact that the cost constraint
accounting information. has on reporting accounting information.
2-29 2-30 LO 5
Income Income
Expenses Expenses
2-31 LO 5 2-32 LO 5
SECOND LEVEL: BASIC ELEMENTS SECOND LEVEL: BASIC ELEMENTS
Elements of Financial Statements Elements of Financial Statements
Asset Asset
Liability Liability
Equity The residual interest in the assets of the Equity Increases in economic benefits during the
entity after deducting all its liabilities.
accounting period in the form of inflows or
enhancements of assets or decreases of
Income Income
liabilities that result in increases in equity,
other than those relating to contributions
Expenses Expenses from equity participants.
2-33 LO 5 2-34 LO 5
2
THIRD LEVEL: RECOGNITION, MEASUREMENT,
Conceptual Framework AND DISCLOSURE CONCEPTS
for Financial Reporting
These concepts explain how companies should recognize,
measure, and report financial elements and events.
LEARNING OBJECTIVES
Recognition, Measurement, and Disclosure Concepts
After studying this chapter, you should be able to:
ASSUMPTIONS PRINCIPLES CONSTRAINTS
1. Describe the usefulness of a conceptual 5. Define the basic elements of financial
framework. statements. 1. Economic entity 1. Measurement 1. Cost
2. Describe efforts to construct a conceptual 2. Going concern 2. Revenue recognition
6. Describe the basic assumptions of
framework. accounting. 3. Monetary unit 3. Expense recognition
3. Understand the objective of financial 7. Explain the application of the basic principles 4. Periodicity 4. Full disclosure
reporting. of accounting. 5. Accrual
4. Identify the qualitative characteristics of 8. Describe the impact that the cost constraint
accounting information. has on reporting accounting information.
ILLUSTRATION 2-7
Conceptual Framework for
Financial Reporting
2-39 2-40 LO 6
THIRD LEVEL: ASSUMPTIONS THIRD LEVEL: ASSUMPTIONS
After studying this chapter, you should be able to: ! Fair value is defined as “the price that would be received to
1. Describe the usefulness of a conceptual 5. Define the basic elements of financial
sell an asset or paid to transfer a liability in an orderly
framework. statements.
2. Describe efforts to construct a conceptual 6. Describe the basic assumptions of transaction between market participants at the measurement
framework. accounting. date.”
3. Understand the objective of financial 7. Explain the application of the basic
reporting. principles of accounting. ! IASB has given companies the option to use fair value as the
4. Identify the qualitative characteristics of
accounting information.
8. Describe the impact that the cost constraint basis for measurement of financial assets and financial
has on reporting accounting information.
liabilities.
2-43 2-44 LO 7
THIRD LEVEL: BASIC PRINCIPLES THIRD LEVEL: BASIC PRINCIPLES
2-45 LO 7 2-46 LO 7
After studying this chapter, you should be able to: ! Rule-making bodies and governmental agencies use cost-
1. Describe the usefulness of a conceptual 5. Define the basic elements of financial
framework. statements.
benefit analysis before making final their informational
2. Describe efforts to construct a conceptual 6. Describe the basic assumptions of requirements.
framework. accounting.
3. Understand the objective of financial 7. Explain the application of the basic principles ! In order to justify requiring a particular measurement or
reporting. of accounting.
disclosure, the benefits perceived to be derived from it
4. Identify the qualitative characteristics of 8. Describe the impact that the cost
accounting information. constraint has on reporting must exceed the costs perceived to be associated with it.
accounting information.
2-51 2-52 LO 8
THIRD LEVEL: COST CONSTRAINT
2-53 LO 8 2-54 LO 8
2-55 2-56
GLOBAL ACCOUNTING INSIGHTS GLOBAL ACCOUNTING INSIGHTS
2-59 2-60
GLOBAL ACCOUNTING INSIGHTS GLOBAL ACCOUNTING INSIGHTS
2-61 2-62
COPYRIGHT
Copyright © 2014 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Copyright Act without the
express written permission of the copyright owner is unlawful.
Request for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The purchaser
may make back-up copies for his/her own use only and not for
distribution or resale. The Publisher assumes no responsibility for
errors, omissions, or damages, caused by the use of these
programs or from the use of the information contained herein.
2-63