This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Conceptual framework — Measurement

Date recorded:

The Staff member updated the Board about the changes to the paper, the one of which related to the measurement principles. They have been extended and Principle 3 was added, as a result the three current are:

  1. The relevance of information provided by a particular measurement method depends on how it affects the statement of financial position, the statement(s) of profit or loss and comprehensive income and if applicable, the statement of changes in equity and the notes to the financial statements.
  2. The cost of a particular measurement must be justified by the benefits of reporting that information to existing and potential investors, lenders, and other creditors.
  3. The number of different measures used should be the minimum necessary to provide relevant information. Unnecessary changes in measurement methods should be avoided, and necessary changes should be clearly explained.

Various Board members had different reactions to the principles as they were currently stated with a general feeling that they were formulated at a very high level and therefore they were not specific / operational enough.

One Board member believed that Principle 1 should be re-drafted back as it was written in February, i.e. measurements should provide relevant information. Someone proposed that the text from paragraph 65 could be used as Principle 1: ‘the measurement method used for a particular asset should be based on how it contributes to future cash flows’.

Another Board member wondered whether Principle 2 (cost vs. benefit) was necessary at all, given that it was already included in the Conceptual Framework.

Another discussion was around the three categories of measurement methods:

  1. cost
  2. fair value and other current prices
  3. other cash-flow measures.

More specifically, some Board members felt that ‘fair value’ was not an accurate description and should be labelled as ‘market-based values’.

The Staff will revise the paper based on the feedback from the discussion.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.