Reference no: EM131820513

Assignment

1. Explain why principles-based standards require a conceptual framework.

2. Why is it important that the IASB and FASB share a common conceptual framework?

3. It is suggested that several parties can benefit from a conceptual framework. Do you consider that a conceptual framework is more important for some parties than others? Explain your reasoning.

4. What is meant by a 'cross-cutting' issue? Suggest some possible examples of cross cutting issues.

Questions

1. What you think is the fundamental problem with financial statements based upon the historic cost measurement principle used under US GAAP ?

2. What do you think of the principle' ... accounts must reflect economic reality' as a core principle of measurement in accounting?

3. How would you measure economic reality?

4. What is reliability in accounting?

1. The article states that the US standard setter FASB requires companies to record a provision in relation to environmental costs of retiring an asset ('to reserve environmental liabilities') if its fair value could be reasonably estimated. How do you think companies would go about estimating such a provision?

1. What aspects of the requirements were used by US companies to defer recognition of a liability?

2. In what ways does the recognition of the liability in relation to future restoration activity affect (a) net profit in the current year and future years; and (b) cash flow in the current and future years?

3. The article refers to changes in disclosure requirements relating to environmental liabilities in many countries around the world. How important is it that companies recognise the liability? To what extent is disclosure about the liability sufficient?