Critical discussion on the definition of assets and liabilities contained in the IASC Framework
Summary :
Table of Contents
- International Accounting Standards Committees and 40 standards and conceptual frameworks.
- Purpose of the framework.
- What the framework provides.
- The framework's definition of liabilities.
- The IAS 37 Provisions.
- Conclusion.
Abstract
Although it may come as a surprise to many non- accountants, the accounting profession internationally has encountered a great deal of problems in arriving at robust definitions for the elements of financial statements. Defining assets, liabilities, and gains and losses (income and expenditure) has been particularly problematical. These definitions form the core of any conceptual framework that is to be used as a basis for preparing financial statements. It is also in this area that the International Accounting Standards Committees framework for the Preparation and Presentation of Financial Statements has come in for some criticism. It seems that the current accounting treatment of certain items does not (fully) agree with definitions in the framework. A major objective of the framework is to exclude from the balance sheet items that are neither assets nor liabilities; and to make off balance sheet assets and liabilities more visible by putting them on the balance sheet whenever practicable.
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