BU387 Chapter Notes - Chapter 2: Financial Engineering, Revenue Recognition, Financial Statement
Document Summary
Helps users conirm or correct their previous expectaions; has feedback/conirmatory value: representaional faithfulness relects the underlying economic substance of an event/transacion. Info that is representaionally faithful is complete, neutral and free from material error or bias. Completeness statements should include all necessary informaion to portray underlying events. Neutrality informaion cannot be selected to favour one set of stakeholders over another. Standard seters must also choose the best standards regardless of economic consequences. Freedom from material error/bias informaion must be reliable: enhancing qualitaive characterisics, comparability informaion that has been measured and reported in a similar way is considered comparable (company to company or year-to-year) Materiality info is material if including it or leaving it out would inluence the judgement of a reasonable person (qualitaive factors must be considered in determining materiality as well) Cost vs. beneit the costs of providing the informaion must be weighed against the beneits that can be had from using the informaion.
