Q1ISTQ - Intermediate Accounting (Kieso)

Question

Question: Which of the following statements about the IASB and FASB conceptual frameworks is not correct?

1. The IASB conceptual framework does not identify the element comprehensive income.
2. The existing IASB and FASB conceptual frameworks are organized in similar ways.
3. The FASB and IASB agree that the objective of financial reporting is to provide useful information to investors and creditors.
4. IFRS does not allow use of fair value as a measurement basis.

Step-by-Step Solution

Answer

Answer

The correct option is (d) IFRS does not allow the use of fair value as a measurement basis.

Step 1: Definition of Conceptual Framework

Conceptual frameworks can be defined as the fundamentals and the principles that must be followed to achieve the targeted objective of the financial reporting

Step 2: Explanation for correct options

Option (d) is correct because the IFRS allows the use of fair value for measurement basis. The fair value measurement basis is described under IFRS 13. IFRS 13 provides information about the fair value measurement and its disclosure

Step 3: Explanation for incorrect options

1. This option is incorrect because the IASB conceptual framework does not identify the element of comprehensive income. Rather, it identifies the element changes in equity.
2. This option is incorrect because the conceptual framework of both IASB and FASB are organized in similar ways to 
3. This option is incorrect because the IASB and FASB both believe that the main users of the financial statement and also believe that these are prepared to provide useful information to them only.