Symmetric Prudence in New Definitions of Conceptual Framework for Financial Reporting

Shkulipa Liudmyla ()
Additional contact information
Shkulipa Liudmyla: National Academy of Statistics, Accounting and Audit: Kyiv, Kyiv, Ukraine

New Challenges in Accounting and Finance, 2021, vol. 5, 35-49

Abstract: Since the version of the Conceptual Framework for Financial Reporting is revised, the interest in accounting concepts that are fundamental in financial reporting has been growing. The purpose of this article is to investigate the evolutionary logic of prudence in the definitions and recognition criteria of assets and liabilities, the causes and consequences of new changes in the Conceptual Framework of 2018. As a result, it was obtained that different interpretations of probability and asymmetric asset and liability identification caused the new changes. The reconciliation between the intentions of new asset and liabilities definitions and their correct understanding results has been illustrated. The new complication in defining obligation such as “no practical ability to avoid†was found. In conclusion, we constant the new definitions as the positive consequence from a psychological point of view, simplifying individuals judgments, as from a conceptual point of view, leading to the common understanding and improvements of qualitative characteristics of financial information. The direct evidence of conceptual improvement is symmetric prudence as support of financial statements’ fundamental qualitative characteristics – faithful representation.

Keywords: Asset; Liability; Probability; Conceptual Framework for Financial Reporting; Prudence (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://api.eurokd.com/Uploads/Article/468/NCAF.2021.05.03.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bco:ncafaa::v:5:y:2021:p:35-49

DOI: 10.32038/NCAF.2021.05.03

Access Statistics for this article

New Challenges in Accounting and Finance is currently edited by Prof. Dr. Orhan Elmacı

More articles in New Challenges in Accounting and Finance from EUROKD
Bibliographic data for series maintained by Sara Gunen ().