Adrian Johnson
TLDR:
Key Points:
- Financial Accounting Standards Board (FASB) adopted the final chapter of its conceptual framework focusing on measurement factors for setting standards.
- The chapter sets a baseline that measurement is anchored in prices, providing guidelines for standard setters.
The Financial Accounting Standards Board (FASB) recently finalized its conceptual framework, marking a significant milestone in the accounting industry. This framework establishes guidelines for measurement factors that standard setters must consider when setting accounting standards. Despite being new in 2024, the definition of measurement is critical for the profession due to evolving technological landscapes.
The final chapter of the framework sets a baseline that measurement is anchored in prices, specifically entry and exit prices, providing a roadmap for the FASB when addressing emerging transaction patterns. The FASB remains committed to a mixed measurement model incorporating historical cost and fair value to balance benefits and costs in financial reporting.
By completing the framework, the FASB has cleared its agenda for the first time since 2006, allowing bandwidth for future standard-setting projects. The board now has several active projects related to software costs, intangible assets, commodities, and other areas, with measurement discussions rooted in the framework’s two price-based systems.
While the framework outlines boundaries for measuring assets and liabilities, concerns have been raised about potential unintended consequences for businesses. Comment letters submitted to the FASB will provide insights into the implications for the accounting profession and broader business community. Moving forward, the FASB will focus on addressing accounting questions to navigate the next era in accounting.
