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The Financial Accounting Standards Board has issued a proposed new chapter of its Conceptual Framework related to the measurement of items recognized in financial statements. The Conceptual Framework is a body of interrelated objectives and fundamentals that provides the FASB with a useful tool as it sets standards.
A Statement of Financial Accounting Concepts is nonauthoritative and does not establish or change generally accepted accounting principles. Stakeholders are encouraged to review and provide comment on the proposed chapter by March 20, 2024.
If finalized by the board, the proposed chapter would become Chapter 6 of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, and would represent the completion of the FASB’s Conceptual Framework. The new chapter would be similar to the rest of the framework in that it establishes concepts that the board would consider in developing standards of financial accounting and reporting.
It would provide the board with a framework for developing standards that meet the objective of financial reporting and enhance the understandability of information for existing and potential investors, lenders, donors, and other resource providers of a reporting entity.
The proposed chapter provides concepts for the board to consider when choosing a measurement system for an asset or a liability recognized in general purpose financial statements. It describes:
- Two relevant and representationally faithful measurement systems: the entry price system and the exit price system and
- Considerations when selecting a measurement system.
The proposed chapter, including information on how to submit comments, is available at www.fasb.org.
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