Conceptual Framework

Question 1

What are the things in the conceptual framework that you need to consider?

Answer 1

• Chapter 1 - the objective of general purpose financial reporting
• chapter 4 - the elements of the financial statements
• chapter 5 - recognition and derecognition
• chapter 6 - measurement

Question 2

How should a conceptual framework question be approached?

Answer 2

1. Describe the issue
2. Discuss what the standard says on the issue, from ELEMENTS, RECOGNITION and MEASUREMENT
3. Discuss what we now apply and say why by relating the standard to the facts

Question 3

Is it more important to record the legal substance or economic substance of transactions?

Answer 3

Economic because that would be a faithful representation and not misleading

Question 4

Does a liability have any measurement uncertainity?

Answer 4

No, if there is ANY, you need to start thinking about recognizing a provision then