Reference no: EM13487230

Question 1

Background

Following is the definition of an asset from three sources:

?      SFAC No. 6, paragraph 25: "Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events."

?      IASB The Conceptual Framework for Financial Reporting, Chapter 4, paragraph 4.4(a): "An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity."

?      The Boards' working definition as of October 2008 from the Joint Project on Conceptual Framework, Phase B - Elements and Recognition: "An asset of an entity is a present economic resource to which the entity has a right or other access that others do not have."

Required

?      Read each definition and compare and contrast the FASB and IASB versions and then compare to the Boards' definition.

?      What is the best definition and why?

?      Review the following items and evaluate if they should be recorded as an asset under the Boards' definition defined above. Focus on "... present economic resource" and "... right or other access" in your analysis.  Complete the table provided.

Question 2

Background

Following is the definition of a liability from three sources:

?      SFAC No. 6, paragraph 35: "Liabilities are probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events."

?      IASB The Conceptual Framework for Financial Reporting, Chapter 4, paragraph 4.4(b): "A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits."

?      The Boards' working definition as of October 2008 from the Joint Project on Conceptual Framework, Phase B - Elements and Recognition: "A liability of an entity is a present economic obligation for which the entity is the obligor."

Required

?      Read each definition and compare and contrast the FASB and IASB versions and then compare to the Boards' definition.

?      What is the best definition and why?

?      Review the following items and evaluate if they should be recorded as a liability under the Boards' definition above. Focus on "... present economic obligation" and "... entity is obligor" in your analysis.  Complete the table provided.