Qualitative characteristics of financial information

Reference no: EM132934359

1. What is the difference between a conceptual framework and accounting standards?

2. Outline the technical benefits of a conceptual framework. What problems could occur if accounting standards were set without a conceptual framework?

3. Distinguish between ‘cautious' prudence and ‘asymmetrical' prudence. Using an example, explain what is meant by prudence in the proposed Framework (2018 Conceptual Framework).

4. Outline and contrast the recognition criteria for items in both the 2010 Conceptual Framework and the proposed Framework (2018 Conceptual Framework).

5. Explain the advantages and disadvantages of principle-based and rule-based standards.

6. Identify the qualitative characteristics of financial information in the Conceptual Framework/proposed Framework (2018 Conceptual Framework). How are these related to the objectives of general purpose financial reports?

7. Some people argue that the conceptual framework is acceptable in theory but in practice it does not work. Explain possible problems with and criticisms of the current Conceptual Framework. Do you think these problems exist and criticisms are valid?

8. Explain why some people believe that the concept of faithful representation in the Conceptual Framework is incorrect.

Contemporary issue 2.2

New lease accounting to have big impact
Questions

1. Consider the definitions of an asset and liability in the Proposed Framework. Would a 5-year lease for land meet these de¬finitions?

2. The extract discusses the fact that these changes reflect the way in which accounting is moving - that is, towards putting all assets and liabilities on the balance sheet. What reasons could there be for this move? Is this consistent with the approach in the 2018 Conceptual Framework? Given the identi¬fied impact on key company ratios, do you believe this approach is justified?

Reference no: EM132934359

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