Two papers regarding measurement aspects in the Conceptual Framework

  • ASBJ (Accounting Standards Board of Japan) Image
  • ASAF (Accounting Standards Advisory Forum) (mid blue) Image

05 Mar, 2015

For the upcoming meeting of the Accounting Standards Advisory Forum (ASAF), which is to be held at the IASB's offices in London on 26-27 March 2015, the Accounting Standards Board of Japan (ASBJ) has submitted 'Identification, Description and Classification of Measurement Bases' and 'Role of "Nature of an Entity’s Business Activities" in Accounting Standard-Setting'.

In the first paper, the ASBJ provides its view on the IASB's tentative decisions regarding identification, description and categorisation of measurement bases. The ASBJ believes that the IASB's tentative decision to have a binary classification (classifying measurement bases into historical cost and current value) is insufficient. Therefore, the ASBJ suggests an alternative approach that would classify measurement bases on the basis of (a) whether inputs for measurements need to be updated (the ASBJ envisions three categories: fully-updated inputs, partially-updated inputs, and locked-in inputs) and (b) whether market participants assumptions or entity-specific assumptions need to be adopted when measuring an asset or a liability.

In the second paper, the ASBJ underlines its view that the nature of an entity's business activities has significant effect on various aspects of accounting standard-setting and that there should be an overarching description in the Conceptual Framework that should be applied consistently throughout the standard-setting process. The ASBJ thus disagrees with the IASB's tentative decision that the forthcoming Exposure Draft of possibles changes to the Conceptual Framework should not provide a single over-arching description of how the nature of an entity's business activities would affect standard-setting. In the paper, the ASBJ identifies questions that need to be ansered in this context and suggests principles for classifying and describing the nature of an entity's business activity.

Both papers can be accessed through the press release on the ASBJ website.

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