The Financial Accounting Standards Board has added two new chapter to its Conceptual Framework.
Issued as “concept statements,” the chapters cover the elements of financial statements, and their presentation.
“The new chapters of the Conceptual Framework address two important areas of financial reporting: financial statement elements and presentation,” said FASB Chair Richard Jones, in a statement. “They enhance our Conceptual Framework, which is a tool for the board to use in setting standards that improve the understandability of information entities provide to existing and potential investors, lenders, donors, and other resource providers.”
First, FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting — Chapter 4, “Elements of Financial Statements,” defines the financial statement elements to be applied in creating accounting standards. The new chapter supersedes Concepts Statement No. 6, “Elements of Financial Statements.”
Second,FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting — Chapter 7, “Presentation,” lays out the factors the board should consider when deciding how items should be displayed in financial statements. The new chapter supersedes portions of Concepts Statement No. 5, “Recognition and Measurement in Financial Statements of Business Enterprises.”
The Conceptual Framework represents the basic objectives and fundamentals around which FASB develops standards. Concept statements are non-authoritative, and don’t establish or change current accounting standards.