ACCG101 Lecture Notes - Lecture 2: International Accounting Standards Board, Historical Cost, Listing Rules

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scarletsquirrel639

19 Jun 2018

School

Macquarie University

Department

Accounting and Corporate Governance

Course

ACCG101

Professor

Rajni MALA

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Accounting Regulation and

Conceptual Framework (Ch. 17)

ACCG101 – Week 2

2015 Session 1 – Stanley & Rajni

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Learning Objectives

1. describe the development of accounting regulation in Australia resulting in

the issue of accounting standards (pp. 720–7)

2. explain the nature of the Conceptual Framework for Financial Reporting,

and the history of the development of the framework (pp. 728–9)

3. describe the objectives of general purpose financial reporting under the

Conceptual Framework (pp. 732–4)

4. identify the qualitative characteristics of financial information (pp. 734–8)

5. define assets, liabilities, equity, income and expenses, as established under

the Conceptual Framework (pp. 739–42)

6. describe the recognition criteria, established in the Conceptual Framework,

for assets, liabilities, income and expenses (pp. 742–8)

7. explain the importance of measurement in the preparation of financial

statements (pp. 748–50).

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Who is involved in regulating

accounting?

•Australian Securities & Investment Commission (ASIC)

•Australian Securities Exchange (ASX) = Stock Exchange

•Financial Reporting Council (FRC)

•Australian Accounting Standards Board (AASB)

•International Accounting Standards Board (IASB)

•International Financial Reporting Standards Interpretations

Committee (IFRSIC)

•Professional Bodies

•Read Chapter 17 pp. 720-727 for details on these bodies

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Document Summary

Learning objectives: describe the development of accounting regulation in australia resulting in the issue of accounting standards (pp. 720 7: explain the nature of the conceptual framework for financial reporting, and the history of the development of the framework (pp. 728 9: describe the objectives of general purpose financial reporting under the. 732 4) identify the qualitative characteristics of financial information (pp. 4: define assets, liabilities, equity, income and expenses, as established under the conceptual framework (pp. 739 42: describe the recognition criteria, established in the conceptual framework, for assets, liabilities, income and expenses (pp. 742 8: explain the importance of measurement in the preparation of financial statements (pp. Who is involved in regulating accounting: australian securities & investment commission (asic, australian securities exchange (asx) = stock exchange, financial reporting council (frc, australian accounting standards board (aasb) Committee (ifrsic: professional bodies, read chapter 17 pp.

Related Questions

Unit 6 GAAP Application-Conceptual Framework of Accounting TheConceptual Framework allows for the systematic adaptation ofaccounting standards to a changing business environment. The FASBuses the conceptual framework to aid in an organized and consistentdevelopment of new accounting standards. The conceptual frameworkoutlines the objectives of financial reporting and the qualities ofgood accounting information, precisely defines commonly used termssuch as asset and revenue, and provides guidance about appropriaterecognition, measurement, and reporting. Understanding theterminology associated with the framework is imperative. Match thenumbered statements below with the lettered terms. An answer(letter) may used more than once, and some terms require more thanone answer (letter). 1. Key ingredients in quality of relevance. 2.Traditional assumptions that influence the FASB's conceptualframework. 3. The idea that information should represent what itpurports to represent. 4. An important constraint relating to costsand benefits. 5. An example of conservatism 6. The availability ofinformation when it is needed. 7. Recording an item in theaccounting records. 8. Determines the threshold for recognition. 9.Implies consensus. 10. Transactions between independent parties. a)Cost-effectiveness b) Representational faithfulness c) Recognitiond) Verifiability e) Time periods f) Unrealized g) Completeness h)Timeliness i) Materiality j) Predictive value k) Economic entity l)Lower-of-cost-or-market rule m) Phrenology n) Arm's-lengthtransactions Now that you have reviewed the terminology, for eachsituation listed below, indicate by letter the appropriatequalitative characteristic(s) or accounting concept(s) applied. Aletter may be used more than once, and more than one characteristicor concept may apply to a particular situation. Explain why youchose your answer.

1. Goodwill is recorded in the accounts only when it arises fromthe purchase of another entity at a price higher than the fairmarket value of the purchased entity's identifiable assets. 2. Landis valued at cost. 3. All payments out of petty cash are debited toMiscellaneous Expense. 4. Plant assets are classified separately asland or buildings, with an accumulated depre-ciation account forbuildings. 5. Periodic payments of $1,500 per month for services ofH. Hay, who is the sole propri-etor of the company, are reported aswithdrawals. 6. Small tools used by a large manufacturing firm are^recorded as expenses when purchased. 7. Investments in equitysecurities are initially recorded at cost. 8. A retail storeestimates inventory rather than taking a complete physical countfor purposes of preparing monthly financial statements. 9. A notedescribing the company's possible liability in a lawsuit isincluded with the financial statements even though no formalliability exists at the balance sheet date. 10. Depreciation onplant assets is consistently computed each year by thestraight-line method. a) Understandability b) Verifiability c)Timeliness d) Representational faithfulness e) Neutrality f)Relevance g) Going concern h) Economic entity i) Historical cost j)Measurability k) Materiality l) Comparability Type your answers ina Word Document, and submit to the Drop Box.

maroonoyster77

GAAP Application-Conceptual Framework of Accounting the ConceptualFramework allows for the systematic adaptation of accountingstandards to a changing business environment. The FASB uses theconceptual framework to aid in an organized and consistentdevelopment of new accounting standards. The conceptual frameworkoutlines the objectives of financial reporting and the qualities ofgood accounting information, precisely defines commonly used termssuch as asset and revenue, and provides guidance about appropriaterecognition, measurement, and reporting. Understanding theterminology associated with the framework is imperative. Match thenumbered statements below with the lettered terms. An answer(letter) may used more than once, and some terms require more thanone answer (letter). 1. Key ingredients in quality of relevance. 2.Traditional assumptions that influence the FASB's conceptualframework. 3. The idea that information should represent what itpurports to represent. 4. An important constraint relating to costsand benefits. 5. An example of conservatism 6. The availability ofinformation when it is needed. 7. Recording an item in theaccounting records. 8. Determines the threshold for recognition. 9.Implies consensus. 10. Transactions between independent parties. a)Cost-effectiveness b) Representational faithfulness c) Recognitiond) Verifiability e) Time periods f) Unrealized g) Completeness h)Timeliness i) Materiality j) Predictive value k) Economic entity l)Lower-of-cost-or-market rule m) Phrenology n) Arm's-lengthtransactions Now that you have reviewed the terminology, for eachsituation listed below, indicate by letter the appropriatequalitative characteristic(s) or accounting concept(s) applied. Aletter may be used more than once, and more than one characteristicor concept may apply to a particular situation. Explain why youchose your answer.

1. Goodwill is recorded in the accounts only when it arises fromthe purchase of another entity at a price higher than the fairmarket value of the purchased entity's identifiable assets. 2. Landis valued at cost. 3. All payments out of petty cash are debited toMiscellaneous Expense. 4. Plant assets are classified separately asland or buildings, with an accumulated depreciation account forbuildings. 5. Periodic payments of $1,500 per month for services ofH. Hay, who is the sole proprietor of the company, are reported aswithdrawals. 6. Small tools used by a large manufacturing firm are^recorded as expenses when purchased. 7. Investments in equitysecurities are initially recorded at cost. 8. A retail storeestimates inventory rather than taking a complete physical countfor purposes of preparing monthly financial statements. 9. A notedescribing the company's possible liability in a lawsuit isincluded with the financial statements even though no formalliability exists at the balance sheet date. 10. Depreciation onplant assets is consistently computed each year by thestraight-line method. a) Understandability b) Verifiability c)Timeliness d) Representational faithfulness e) Neutrality f)Relevance g) Going concern h) Economic entity i) Historical cost j)Measurability k) Materiality l) Comparability

redtoad313

In the interactive lecture materials for this module, you readarticles and materials and watched various videos, which describedthe history of the convergence process between the US GAAP andIFRS, including the status of convergence today. You also reviewedreadings showing the differences that still exist today between USGAAP and IFRS on various accounting subjects. Below is a list ofsome particularly significant accounting topics or subjects wheredifferences still exist today between the US GAAP and IFRS:inventories goodwill and other intangible assets contingenciesaccounting for income taxes including uncertainty in income taxesimpairment of long-lived assets to be held or used or to bedisposed of by sale research and development âdevelopmentâexpenses. Select one of the above accounting subjects, preferably asubject personally or professionally interesting to you, and answerthe following questions related to that topic in your initialresponse. Copy and paste each question below in bold type in yourinitial response to ensure that you answer each question. Thesubject line of your initial posting should be the accountingsubject you have decided to address (for example: Inventories):Briefly explain the reason this subject was of interest to you.Describe, in an appropriate level of detail, the major differencesthat exist today between US GAAP and IFRS for that subject.Research if any progress has been made to date on converging theaccounting and/or the financial reporting for that subject betweenthe FASB and the IASB. If so, describe the progress, and if not,describe why progress has not yet been made, either from yourresearch or in your opinion or both. Provide the class with aspecific and detailed computational-based example of how thedifferences in the accounting and financial statement treatment ofthis subject could potentially affect the comparability of both thebalance sheet and the income statement prepared under US GAAP andIFRS. State your opinion on whether you believe the FASB and theIASB eventually will reach convergence on this subject, and why orwhy not. Include an explanation of your opinion and what might besome other considerations preventing or delaying convergence onthis subject.

ACCG101 Lecture Notes - Lecture 2: International Accounting Standards Board, Historical Cost, Listing Rules

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