FAR - Conceptual Framework and IFRS

Question 1

Summary Overview of what makes information useful to users of financial statements

Answer 1

2 Primary Qualitative Characteristics

1 - Relevance
-Predictive Value
-Confirmatory Value
(Material)

2 - Faithful Representation

• Error Free
• Neutrality
• Completeness

                  Enhancing Qualitative Characteristics
          -Comparability
          -Understandability 
          -Timeliness
          -Verifiability 
                                        Constraint - Cost/benefit

Question 2

Physical Capital Maintenance Concept

Answer 2

An event is recognized when an asset is sold or a liability is settled

Question 3

Financial Capital Maintenance Concept

Answer 3

An event is recognized as a change in the value of an asset or liability occurs (recognizes holding gains or losses)

Question 4

Recognition

Answer 4

Recognizing an item in the financial statements (booking it)

Question 5

Realization

Answer 5

Converting non-cash resources into cash or a claim for cash

Question 6

Principal Market

Answer 6

The Market where the greatest volume and level of activity occurs

Question 7

Most advantageous market

Answer 7

The market that maximizes price received for an asset or minimizes the price to transfer a liability

Question 8

Market Approach

Answer 8

A valuation techniques that uses prices and relevant information from market transactions for identical or comparable assets/liabilities

Question 9

Income Approach

Answer 9

Valuation technique that converts future revenues and expenses or cash flows into a single current amount

Question 10

Cost Approach

Answer 10

A valuation technique that uses the current cost of replacing the service capacity of an asset

Question 11

Special Purpose Financial Reporting Framework

Answer 11

A financial reporting framework other that GAAP or IFRS used for the preparation of financial statements

Question 12

GAAP

Answer 12

General purpose framework issued by FASB used for the preparation of and presentation of financial statements.

Question 13

FASB

Answer 13

The board that is responsible for maintaining the FASB Accounting Standards Codification, the only authoritative source of GAAP. Through the issuance of Accounting Standards Updates (ASUs) and is responsible for issuing statements on financial accounting concepts (SFACs), the framework upon which GAAP is based.

Question 14

Emerging Issues Taskforce

Answer 14

A board created by FASB to address new and unusual financial transactions.

Question 15

IFRS

Answer 15

A general purpose financial reporting framework that is comprehensive in nature, established and maintained by the International Accounting Standards Board (IASB) used for the preparation of financial statements in many countries outside of the United States and accepted, in many cases, for financial reporting within the US.