FASB is seeking comments on a proposed new chapter of its Conceptual Framework related to the recognition and derecognition of an item in financial statements.
The proposed chapter, Chapter 5 of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, sets recognition and derecognition criteria and guidance on when an item should be incorporated into and removed from financial statements, according to a news release.
Stakeholders are asked to provide input on three proposed recognition criteria an item should meet to be recognized in financial statements, subject to the pervasive cost constraint and materiality considerations. Those proposed criteria are:
- Definitions — The item meets the definition of an element of financial statements.
- Measurability — The item is measurable and has a relevant measurement attribute.
- Faithful Representation — The item can be depicted and measured with faithful representation.
FASB also seeks stakeholder input on whether derecognition — the process of removing an item from financial statements of a reporting entity as an asset, liability, or equity — should occur when an item no longer meets any one of the recognition criteria.
Comments on the proposed new chapter will be accepted through Feb. 21. They may be submitted by email to firstname.lastname@example.org.
— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.