Rules Based Accounting And Accounting - 1313 Words

Rules based accounting Principes Based accounting Potential for different interpretations for similar transactions Financial statements are prepared on a going concern basis, financial statements are generally prepared on a going concern basis unless liquidation is imminent. Research is more based off of literature Review of the facts pattern is much more thorough Assets the revaluation of intangible assets is not allowed. Intangible assets may be revalued to fair value only if there is an active market. Because several different Codification topics apply to the accounting for intangible assets, there are different measurement bases on initial recognition. Intangible assets are recognised initially at cost. The fair value of an asser retirement obligation liability is recognized in the period it is incurred if a reasonable estimate of fair value can be made. ARO2 liability is measured as the best estimate of the expenditure to settle the obligation or to transfer the obligation to a third party as of the balance sheet date. at intial recognition of a liability as an ARO, they increase the related long-lived asset by the same amount. Property, plant, and equipment include the initial estimate of the ARO unless it is happened in a period in which the property was used to produce inventory, in that case the ARO would be added to the carrying amount of the inventory. Contingencies Teminology: Estimated loss Teminology: Provision Contingent lossShow MoreRelatedPrincipal vs Rule Based Accounting1733 Words   |  7 Pagesamp; Implications of IFRS adoption on Financial Statement and Accounting Quality Q2) Principle and rule-based accounting reflect different approaches to accounting. The pros and cons of rule-based accounting (RBA) and principle-based accounting (PBA) are as discussed. (1) RBA deters creative accounting as rules reduce opportunistic discretion unlike PBA which is more subjective and ambiguous.On the other hand, others argue that rules are a means to circumvent the objectives of a standard and moreRead MoreRules Based Accounting Standards And The Decision Making For Accountants Facing Financial Statements Essay892 Words   |  4 Pagesposition of accounting becoming higher, accountants should have enough professional abilities to solve problems or make decisions. In addition, high quality accountants must follow a set of guiding principles for preparing financial reports during their careers. Therefore, numerous principles and rules are significant when it comes to accounting. The External Reporting Board (XRB) which called the New Zealand Conceptual Framework (CF ) provides the basic principles. Comparing to CF, the rules-based accountingRead MoreDefinition And Example Of Principles Based Accounting1317 Words   |  6 PagesDefinition and Example of Principles-based Accounting There are more than one way that can be utilized to define principles-based accounting. Generally, principles-based accounting delivers a general guidance on accounting implementation derived from the conceptual framework. Principles-based accounting mainly focuses on the substance of the transaction not the form of the transaction. Under a principles-based approach, accounting standards are only a general framework providing guidance to managersRead MoreAccounting Regulatory Agencies1280 Words   |  6 PagesACCOUNTING REGULATORY AGENCIES Introduction Accounting standards are needed so that financial statements will fairly and consistently describe financial performance. Without standards, users of financial statements would need to learn the accounting rules of each company, and comparisons between companies would be difficult. Numerous accounting bodies govern the accounting environment and accommodate the success of a business. The four main financial governing bodies includeRead MoreCritical Review of Principles-Based Accounting Standards1324 Words   |  6 Pageson the rules-based and principles-based accounting standards. The aim of this article is to discuss the attributes and potential effects of transferring from rules-based standards to principles-based standards. To some extent this article is critical, but several limitations need to be discussed, such as implementation guidance. Summary Schipper (2003) demonstrated that there was a long-running debate on whether U.S. GAAP should be shifted to principles-based system instead of rules-based systemRead MoreAccrual Basis Vs. Cash Basis1737 Words   |  7 PagesAbstract This is a discussion of two types of accounting methods that most companies use, accrual basis or cash basis. A definition of both concepts and comparisons between the two methods will be discussed. In addition, it describes and examines the difference in the managing of those methods and which form of accounting method is more useful and beneficial to provide information to users for different purposes. In cash basis accounting, revenue is recorded only when the cash is received, andRead MoreBenefits And Benefits Of Harmonisation1354 Words   |  6 Pages(2002) agrees that stakeholders in general find it hard to make use of information that is not prepared using their domestic ways. Harmonisation will make it more likely that users will interpret the information correctly, and make better decisions based on that information. (Choi, et al., 2002) Reduction of Costs At the moment a lot of international companies experience high cost of preparing financial statements in different countries as they all have different methods and even more so when it comesRead MoreThe International Accounting Standards Board1249 Words   |  5 Pagesinformation worldwide. The financial world is challenged by disparate accounting standards between jurisdictions, preventing the free flow of capital worldwide. The mission of the International Accounting Standards Board (IASB) is to develop a single set of accounting standards, enabling capital to flow in international markets as easily as information spreads between people. This paper presents a brief history of international accounting standard setting and the IASB, considers arguments for and againstRead MoreU.s. Accounting Practices Can Cause Complications1060 Words   |  5 PagesAfter a thorough analysis of several U.S. accounting failures such as those at ENRON, Worldcom, and others, individuals in the Europe an Union and around the world claim that had the U.S. followed International Financial Reporting Standards, instead of U.S. GAAP, these debacles might never had happened. For many years, the accounting profession had faced several challenges developing a set of guidelines that would be generally accepted and universally practiced around the globe. In more recent yearsRead MoreEthics and Conceptual Framework Paper1333 Words   |  6 PagesFramework There are two major philosophies in accounting consisting of a principles-based system for accounting and a rules-based system for accounting. The following discussion will speak about these two philosophies and will define one as being a best fit for encompassing the role of ethics and the conceptual framework. The conceptual framework was established by the Financial Accounting Standards Board (FASB) and is used to help define the boundaries of accounting. It gives definitions of key terms and