Revised Conceptual Framework for Financial Reporting

Running head: FINANCIAL ACCOUNTING
Financial Accounting
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1FINANCIAL ACCOUNTING
Table of Contents
Introduction................................................................................................................................4
Discussion..................................................................................................................................5
Objective of GPFR.................................................................................................................5
Qualitative Characteristics.....................................................................................................5
Relevance...........................................................................................................................6
Materiality..........................................................................................................................6
Faithful representation.......................................................................................................6
Comparability.....................................................................................................................7
Verifiability........................................................................................................................7
Timeliness..........................................................................................................................7
Understand ability..............................................................................................................7
Applying the enhancing qualitative characteristics............................................................7
The cost constraint on useful financial reporting...............................................................8
Financial Reporting................................................................................................................8
Objective and scope of financial statements......................................................................8
Reporting period.................................................................................................................8
Perspective adopted in financial statements and going concern assumption.....................9
The reporting entity............................................................................................................9
Consolidated and unconsolidated financial statements......................................................9
Elements of Financial Statement............................................................................................9
An asset:.............................................................................................................................9

2FINANCIAL ACCOUNTING
Liability............................................................................................................................10
Equity...............................................................................................................................10
Income..............................................................................................................................11
Expense............................................................................................................................11
Recognition of the elements of financial statements........................................................12
Measurement....................................................................................................................13
Presentation and Disclosure.................................................................................................14

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Introduction
Recently the International Accounting Standards Board (IASB) in the year 2018
prescribed the revised Conceptual Framework for Financial Reporting'. The revised
framework defined the different elements of balance sheet. The amendment guided with new
way of measurement, presentation, recognition including the disclosure. The amendment
covered that was till now not been covered. It highlighted the key concern that was to be dealt
as it would short fall in the upcoming time. The main purpose of the framework is to provide
assistance to IASB in order to revise the International Financial Reporting Standards as these
are based on the consistent concepts. The amendment would help in preparing consistency in
the polices of accounting this would provide assistance to the user of the fiscal report in
interpreting the right meaning of the standard. In case where there is no application of
Standard or other criteria that is applicable to a particular transaction. It is the duty of the
management to apply the applicable standard so that the information available becomes
reliable as well as relevant. The amendment of Conceptual framework covers eight specific
parts that would be discussed in the later part of this essay.

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Discussion
Objective of GPFR
The prime objective of GPFR is still helpful to the capable investors, borrowers as
well as other creditors termed as users at the time of decision framing so that an entity can be
financed by means of holding the debt instrument or equity. The users apply their right for
voting on or else manipulates the management. The affect is seen in the resources of the
entity. The amendment in this area has abled the user to assesses the stewardship of the
economic resources that are under the right of an entity. This was the request of wide range of
users. IASB pointed out that the stewardship prevailed earlier too but due to the unambiguous
relevance made it to be marked out from the objective. The base of assessment of users for
their returns rely on the timing, figure, uncertainty that prevails in regard to net cash flow of
the entity in the upcoming time. Secondly, Organisation’s stewardship of the unit’s capitals.
Qualitative Characteristics
The information that is being useful as well as relevant for the users is being
highlighted in this area. Though the amendments in 2010 did not flawlessly cleared the
ambiguity. In the recent amendments board has tried to being transparency in the concepts
related to prudence, measurement of the doubtfulness present in the information (Bohušová
2014).
• Prudence - the Board detected, throughout its outreach procedure, that managers recognise
‘prudence’ to mean unlike belongings, and the elimination of the perception after the 2010
Conceptual Framework had led to additional misperception between managers. The Board
have faith in that prudence back up impartiality of evidence and so defines prudence as ‘the
exercise of carefulness when creating decisions below the circumstances of uncertainty’.

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• Measurement uncertainty – in the reviewed Conceptual Framework, the Board recognised
that dimension uncertainty is an issue that can disturb authentic image. For example, in
particular cases, pertinent evidence might have an in elevation side by side of dimension
uncertainty that might decrease its utility. To some extent less appropriate evidence by a
lesser measurement indecision might be desirable in such belongings.
Relevance
Applicable financial material is proficient of constructing a modification in the
pronouncements completed by manipulators. Financial material is proficient of
manufacturing a variance in choices if it has analytical value, assenting value, or both. The
analytical value as well as assenting value of fiscal material are interconnected.
Materiality
Materiality is a unit-explicit characteristic of significance constructed on the nature or
scale or both of the materials to that the evidence relays in the situation of a single unit's
monetary report.
Faithful representation
GFPR characterise monetary phenomena in arguments and statistics. To be beneficial,
monetary evidence necessity not simply be applicable, it essential also characterise
authentically the phenomena it imports to characterise. Authentic illustration means
illustration of the element of a monetary phenomenon as an alternative of demonstration of its
permissible procedure merely(Bohušová 2014).
Comparability, verifiability, timeliness and understand ability are qualitative
characteristics that improve the helpfulness of evidence that is applicable and authentically
signified.