GASB Presents Concepts on Financial Statement Recognition, Measurement

GASB on Monday issued a Preliminary Views (PV) document on concepts related to recognition of elements of financial statements and measurement approaches. The board said the PV, Recognition of Elements of Financial Statements and Measurement Approaches , presents its early views on how and when an item should be reported (recognition) on state and local government financial statements and how the amount of the item reported on those statements should be determined (measurement approach).

The board is seeking comments on the PV by Sept. 30 and has scheduled public hearings on the document for Oct. 4 in New York City; Oct. 14 in San Francisco; and Oct. 21 in Chicago. Complete details, including how to participate in the hearings, are available in the PV.


The PV says that recognition concepts encompass two aspects of financial statements—measurement focus and basis of accounting. The measurement focus of a specific financial statement determines what items should be reported as assets, liabilities and other elements of that financial statement. The related basis of accounting determines when those items should be reported.

The PV proposes a recognition framework for financial statements prepared using either the “economic resources” measurement focus or the “near-term financial resources” measurement focus. The latter would, from a conceptual standpoint, replace the existing “current financial resources” measurement focus that is used in governmental fund financial reporting. The proposed recognition framework also includes proposed concepts related to recognition of deferred outflows of resources and deferred inflows of resources that would assist the board in determining when those elements should be used in the standard-setting process.

The document proposes a framework for when each of two primary measurement approaches, on a conceptual basis, should be used. The primary measurement approaches are:


  • Initial-transaction-date-based measurement (initial amount) . The transaction price or amount assigned when an asset was acquired or a liability was incurred, including subsequent modifications to that price or amount, such as through amortization or depreciation.
  • Current-financial-statement-date-based measurement (remeasured amount) . The amount assigned when an asset or liability is remeasured as of the financial statement date, including fair value; current acquisition, sales and settlement price; replacement cost; and value-in-use.


The PV identifies characteristics of assets or liabilities that would indicate from a conceptual viewpoint when each measurement approach would be appropriately applied in future standard setting.


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