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Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition by Liesel Knorr, Graham Holt, Abbas A. Mirza

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Chapter 2
IASB FRAMEWORK

INTRODUCTION

The Framework for the Preparation and Presentation of Financial Statements (the “Framework” ) sets out the concepts that underlie the preparation and presentation of financial statements, that is, the objectives, assumptions, characteristics, definitions, and criteria that govern financial reporting. Therefore, the Framework is often referred to as the “conceptual framework.” The Framework deals with
1. The objective of financial statements
2. Underlying assumptions
3. The qualitative characteristics that determine the usefulness of information in financial statements
4. The definition, recognition, and measurement of the elements from which financial statements are constructed
5. Concepts of capital and capital maintenance
The Framework does not have the force of a Standard. Instead, its purposes include, first, to assist and guide the International Accounting Standards Board (IASB) as it develops new or revised Standards and, second, to assist preparers of financial statements in applying Standards and in dealing with topics that are not addressed by a Standard. Thus, in case of a conflict between the Framework and a specific Standard, the Standard prevails over the Framework.
PRACTICAL INSIGHT
In the absence of a Standard or an Interpretation that specifically applies to a transaction, other event, or condition, IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, requires management to use its judgment in developing and ...

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