FASB completes conceptual framework | Accounting Today

The Financial Accounting Standards Board released a new chapter of its Conceptual Framework on the measurement of items recognized in financial statements, while also drawing that long-running project to a close Friday. 

The Conceptual Framework offers a set of interrelated objectives and fundamentals that provides FASB with a useful tool as it sets standards. A Statement of Financial Accounting Concepts is nonauthoritative and doesn’t establish or change GAAP.
 

The new chapter becomes Chapter 6 of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, and actually represents the completion of 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 Jones in a statement. “We thank the FASB members, staff and stakeholders whose input helped us achieve this milestone, one that’s been several decades in the making.”

The new chapter is similar to the rest of the framework, establishing concepts that FASB would consider in developing standards of financial accounting and reporting. It provides FASB with a framework for developing standards that meet the objective of financial reporting and enhance the understandability of information for existing and potential investors, lenders, donors and other resource providers of a reporting entity.

The new chapter offers concepts for FASB for it to consider when selecting 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.