Realigning the framework

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. In July 2013, the International Accounting Standards Board (IASB) issued a Discussion Paper (DP) on a new version of its Conceptual Framework, which provides the fundamental basis for development of International Financial Reporting Standards (IFRS). The Discussion Paper offers an opportunity for users and preparers of financial statements to have an input into the direction of financial reporting standards. What is the purpose of a Conceptual Framework?

  2. The IASB Framework was originally published in the late 1980's and in 2010, 2 chapters of a new framework were issued-Chapter 1, The Objective of General Purpose Financial Reporting and Chapter 3, Qualitative Characteristics of Useful Financial Information. How will the new DP affect these two chapters

  3. The DP proposes to redefine an assets as a present economic resource controlled by the entity because of past events. What is the definition of an economic resource in this context?

  4. Which of the following items would probably not be classed as a liability under the DP?

  5. The DP sets out that the Framework's definition of control should be in line with its definition of an asset. What is the definition of control under the DP?

  6. The distinction between equity and liabilities focuses on the definition of a liability. The current guidance on the difference between equity and liability is complicated. What are the two types of approach identified in the DP?

  7. By looking at the objective of financial reporting, and the qualitative characteristics of useful financial information, the IASB has come to the view that the objective of measurement is to contribute to the faithful representation of relevant information about the resources of the entity, claims against the entity and changes in resources and claims, and about how efficiently and effectively the entity's management and governing board have discharged their responsibilities to use the entity's resources. What do they feel should be the basis of measurement of assets and liabilities?

  8. The current Framework does not contain principles to determine the items to be recognised in profit or loss, and in other comprehensive income and whether, and when, items can be recycled from other comprehensive income to profit or loss. The DP sets out the items which would be included in OCI, being a 'narrow' approach and a 'broad' approach. Which of the following statements is incorrect?

  9. Recognition and derecognition deals with the principles and criteria for assets and liabilities to be included, or removed, from an entity's financial statements. In respect of recognition, the DP sets out to bring this into line with the principles being used by the IASB's in its current projects. Which of the following statements is incorrect regarding recognition and derecognition?

  10. The DP proposes certain revisions to the disclosure framework. Which of the following is not a proposed revision to the disclosure framework?