Assets and Liabilities

Paper Summary:

The paper states that the Financial Accounting Standards Board (FASB ) Financial Accounting Standards Board report entitled "Selected Issues Relating to Assets and Liabilities with Uncertainties" was based on a joint 2004 project between FASB and IASB with the purpose of improving the organization's conceptual framework and concerns the ethical obligations of the accountant's reporting requirements. The paper notes that the areas the report seeks to improve focuses on establishing objectives for better financial reporting by creating qualitative characteristics to be used when conducting financial reporting. The paper comments that the main area of interest in the report is assets and liabilities, primarily the role of probability and uncertainty in defining, recognizing and measuring assets and liabilities. Thus the paper highlights that the goal of the report is to establish an objective framework to be used when reporting on the financial issue of probability and uncertainty and its role in measuring assets and liabilities.

From the Paper:

"According to the current conceptual frameworks, uncertainty is acknowledged as part of the proper definitions of both assets and liabilities. However, neither of the organization's frameworks impose a necessary "threshold level of probability or expectation of cash inflows or outflows in order for an item to satisfy the definition of an asset or liability." Further, the current IASB framework does include a probability threshold criterion as part of its recognition criteria, whereas no such criteria exist in the current FASB conceptual framework."

Sample of Sources Used:

• Financial Accounting Standards Board. (2006): Selected Issues Relating to Assets and Liabilities with Uncertainties: Invitation to Comment. Financial Accounting Foundation.

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