Does Revenue Cause a Firm’s Wealth To Rise?

I have been spending most of 2011 immersed in managerial accounting as I completely rework my course on that topic from the ground up.  This has led me to rethink the Conceptual Framework as well.  One of the most striking differences between the managerial accountant’s and financial accountant’s approaches seems to be that the former [...] Read more > >

AAA Observations on Conceptual Framework

The AAA meeting in Denver had a number of interesting panel sessions.  One that I found enlightening concerned financial reporting and the financial crisis.  The panelists were Greg Waymire, Mary Barth, and Shyam Sunder.  I was not sure what to expect.  The punchline was that none of the panelists felt financial reporting was a prime [...] Read more > >

What is Financial Statement Comparability?

As with many terms in financial reporting, the term comparability means different things to different people. Recently, I’ve read a number of papers that shed academic light on financial statement comparability, which means that the researchers had to define what they mean by comparability and then select an appropriate proxy for that construct. In this [...] Read more > >

Attempted solution to liabilities case below.

I’ll take a crack at answering my own questions in the liabilities case posted on Dec. 9, 2010.  I hope there are some graders out there! Initially record cash and a liability. As corn is produced record an asset (corn inventory). At the end of each accounting period, mark the corn inventory to market and recognize [...] Read more > >


Yesterday’s roundtable recapping the FASB’s 2010 Financial Reporting Issues Conference got me thinking more about defining elements of financial statements, particularly a liability. I’m interested to know whether you can answer the following questions in a way that is consistent with your conception (or the FASB’s conception) of a liability. In any case, this (or [...] Read more > >

Round Table: Recap of 2010 Financial Reporting Issues Conference

Our next round table will be Wednesday, December 8, from 4-5 pm ET. In that session, we will be going over some of the topics and discussions from the 2010 FASB/IASB Financial Reporting Issues Conference, which will be held this weekend in Norwalk, CT. As discussed on the conference website, the objective of this year’s [...] Read more > >

“Scoping out” a conceptual framework

Over the course of my career, I have to admit that I’ve paid little attention to the scope paragrahs of financial accounting standards. Lately, I’ve been thinking that this might be the best place to look for a conceptual framework. In other words, how broad a (principles-based) framework would we need to alleviate the need for [...] Read more > >

Should Standard Setters Care About Economic Consequences?

The recent issuance of CON8 provides some fascinating insights into the the FASB and IASB think about the economic consequences of their standards. In 2008, the FASB and IASB wrote the exposure draft of what would become CON8 (“Exposure Draft of Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Qualitative Characteristics and [...] Read more > >

Why do we fixate on the amount, timing and uncertainty of future cash flows?

The latest Statement of Financial Accounting Concepts (Number eight) reiterates the objective of financial reporting in the following terms: “Decisions by existing and potential investors … and … existing and potential lenders … depend on their assessment of the amount, timing, and uncertainty of (the prospects for) future net cash flows …” (p. 1-2, par. [...] Read more > >

FASB Issues SFAC 8

The Financial Accounting Standards Board continued making progress on its Conceptual Framework Project by issuing a new concept statement earlier this week. The Conceptual Framework Project is a joint effort with the IASB, aimed at producing a signal framework that both Boards could use in developing (ideally converged) standards. This new concept statement, SFAC 8, [...] Read more > >