Current Development in Accounting Thought

Running Head: CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
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Author Note

1CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
1(a).........................................................................................................................................2
Advantages of Advancement of Conceptual Framework Projects........................................2
1(b).........................................................................................................................................4
Comparison and Contrast of Government Intervention and advantage of conceptual
Framework.............................................................................................................................4
2)............................................................................................................................................5
Relevancy of Fair values or Historical cost to Users in AASB framework...........................5
3)............................................................................................................................................6
Merits of Historical method of Accounting...........................................................................6
Conclusion..................................................................................................................................8
Reference....................................................................................................................................9

2CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
Introduction
The method of historical cost basis of measurements is the measure of value used in
measurement system in which the price of the assets in the balance sheet reflects the original
price of the assets. Moreover, the factors that holds popularity of the historical cost
accounting is that when the current value of market changes then the assets and liabilities has
to be reported accordingly at market value, which distorts accounting fabric and unreliable
information of accounting. Further, other competitive accounting methods include fair value,
realizable value and so on. Therefore, under this assignment, discussion will be done on
relevance and benefits of historical cost accounting over other alternatives methods.
Discussion
1(a)
Advantages of Advancement of Conceptual Framework Projects
The conceptual framework is defined as the statement of the theoretical principles,
which provides the guidance for the financial reporting as well as accounting. This
framework is the body of the interrelated objectives as well as fundamental approach. The
conceptual framework’s objective is to identify the purposes as well as goals of the financial
reporting and the fundamentals are underlying concept, which helps in achieving the
objectives. This concept helps in providing the guidance for selecting the transactions,
accountancy of the circumstances and events, the way of recognition as well as measurement
and the way of reporting and summarization. Financial reporting has the purpose for
providing the useful information as the basis for the economic decision-making. The
conceptual framework takes the form of the theoretical basis to determine the measurement
and the reporting of the transactions that is the way it is presented and communicated to the

3CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
users (Macve, 2015). Following are the main advantages of the advancement of the
conceptual framework project:
 The Conceptual framework clarifies the conceptual underpinnings of the accounting
standard as well as it allows the standard setters for developing the standards of
accounting on the consistent basis.
 It deals with the fundamental financial reporting issues such as objectives as well as
financial reporting users, concepts for the recognition as well as measuring of the
elements of the financial statements. It has the characteristic that makes useful
accounting information and basic financial statements elements such as income,
expenses, equity, assets and liabilities (Barker & Penman, 2017).
 It helps in assisting the users, preparers as well as auditors for understanding the
approaches to the standard setting function and financial information reporting nature.
 It significantly contributes to the public confidence as well as to the credibility of the
financial reporting with the reliability, relevance and the consistency by employing
clear and uniform defined principles.
 In the absence of the conceptual framework, the standard setters are acceded to
external pressure by the interested group that leads to ambiguous and haphazard
guidelines and rules.
 The direct beneficiary of conceptual framework is FASB. This framework helps in
providing FASB with the foundation for setting of the standards as well as concepts
for using as the tools for resolving the questions of accounting as well as reporting.
Moreover, both the preparers as well as users of the financial statements gets benefits
from the financial statements, which are based on the requirements of accounting
body that, are more consistent internally.