mkt224
Solutions to Tutorial Questions due in Week 3
Hoggett 8E, Chapter 17: Regulation and The Conceptual
Framework
DQ 4. Briefly explain the nature of the conceptual framework for general purpose financial reporting and discuss the perceived advantages and disadvantages of having a conceptual framework.
A conceptual framework of accounting theory should enable standard setters to develop standards which are consistent and logically formulated, provide guidance to accountants in areas of accounting where standards have not been established, and enable standard users to better understand standards and proposed standards.
The IASB and FASB were undertaking a joint project to amend the conceptual framework. The overall objective of this joint project was to develop a common conceptual framework that is both complete and internally consistent. However, the boards have now split and IASB is working on the CF on its own.
Are there any disadvantages in having a conceptual framework? Consider the cost of developing the framework versus the benefits. Also, since it is not compulsory for standard setters to follow the conclusions of the CF, will it be ignored?
DQ6. From the current Conceptual Framework, outline the qualitative characteristics of financial information to be included in general purpose financial reports.
The Conceptual Framework 2010, issued by the IASB and the FASB, has divided qualitative characteristics into two categories, namely, fundamental characteristics
(relevance and faithful representation) and enhancing characteristics (comparability, understandability, verifiability and timeliness). See Learning objective 5 in the chapter for a discussion of each characteristic.
DQ8. ‘To determine whether an entity should classify its costs either as an asset or an expense, accounting standards must contain definitions of these terms.’
With reference to the above statement, discuss the concept of an asset and an expense provided in the
Hoggett 8E, Chapter 17: Regulation and The Conceptual
Framework
DQ 4. Briefly explain the nature of the conceptual framework for general purpose financial reporting and discuss the perceived advantages and disadvantages of having a conceptual framework.
A conceptual framework of accounting theory should enable standard setters to develop standards which are consistent and logically formulated, provide guidance to accountants in areas of accounting where standards have not been established, and enable standard users to better understand standards and proposed standards.
The IASB and FASB were undertaking a joint project to amend the conceptual framework. The overall objective of this joint project was to develop a common conceptual framework that is both complete and internally consistent. However, the boards have now split and IASB is working on the CF on its own.
Are there any disadvantages in having a conceptual framework? Consider the cost of developing the framework versus the benefits. Also, since it is not compulsory for standard setters to follow the conclusions of the CF, will it be ignored?
DQ6. From the current Conceptual Framework, outline the qualitative characteristics of financial information to be included in general purpose financial reports.
The Conceptual Framework 2010, issued by the IASB and the FASB, has divided qualitative characteristics into two categories, namely, fundamental characteristics
(relevance and faithful representation) and enhancing characteristics (comparability, understandability, verifiability and timeliness). See Learning objective 5 in the chapter for a discussion of each characteristic.
DQ8. ‘To determine whether an entity should classify its costs either as an asset or an expense, accounting standards must contain definitions of these terms.’
With reference to the above statement, discuss the concept of an asset and an expense provided in the