The Financial Accounting Standards Board announced last week that it issued a new chapter of its Conceptual Framework related to the measurement of items recognized in financial statements.
This latest chapter becomes Chapter 6 of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, and it represents the completion of the FASB’s Conceptual Framework.
“The publication of Chapter 6 completes the FASB’s Conceptual Framework—an important tool used by the Board in our decisions,” said FASB Chair Richard R. Jones. “We thank the FASB members, staff, and stakeholders whose input helped us achieve this milestone, one that’s been several decades in the making.”
Accounting Today reported that the FASB’s Conceptual Framework offers a set of interrelated objectives and fundamentals that provides the board with a useful tool as it sets standards. A Statement of Financial Accounting Concepts is not authoritative, and it doesn't establish or change generally accepted accounting principles (GAAP).
This latest chapter offers concepts for the board to consider when choosing a measurement system for an asset or a liability recognized in general purpose financial statements. It describes two relevant and representationally faithful measurement systems: the entry price system and the exit price system, as well as considerations when selecting a measurement system.
The new chapter is available at www.fasb.org.