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Journal of Accountancy

FASB issues 2 new financial accounting concept statements

By Jeff Drew

December 23, 2021

New concept statements released Wednesday address financial statement elements and factors FASB should consider
in developing accounting guidance.

The statements are presented as new chapters of FASB's Conceptual Framework (https://fasb.org/cs/Satellite?
c=Page&cid=1176168367774&pagename=FASB%2FPage%2FBridgePage), which is a collection of interrelated
objectives and fundamentals that provides FASB with a foundation for setting GAAP standards and concepts the board
can use as tools for resolving accounting and reporting questions. Each Statement of Financial Accounting Concepts is
nonauthoritative.

"The new chapters of the FASB's Conceptual Framework address two important areas of financial reporting: financial
statement elements and presentation," FASB Chair Richard R. Jones said in a news release
(https://fasb.org/cs/Satellite?
c=FASBContent_C&cid=1176179205603&pagename=FASB%2FFASBContent_C%2FNewsPage). "They enhance our
Conceptual Framework, which is a tool for the Board to use in setting standards that improve the understandability of
information entities provide to existing and potential investors, lenders, donors, and other resource providers."

The statements issued Wednesday are:

FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting — Chapter 4, Elements of
Financial Statements (https://fasb.org/cs/Satellite?
c=Document_C&cid=1176179207571&pagename=FASB%2FDocument_C%2FDocumentPage), which defines
financial statements elements that should be applied in developing standards for both businesses and not-for-profit
entities. These elements provide a foundation for providing financial information about the reporting entity that is
useful to existing and potential investors, lenders, and other creditors. Chapter 4 supersedes Concepts Statement
No. 6, Elements of Financial Statements.

FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting — Chapter 7, Presentation
(https://fasb.org/cs/Satellite?
c=Document_C&cid=1176179209702&pagename=FASB%2FDocument_C%2FDocumentPage), which identifies
factors for FASB to consider when deciding how items should be displayed on financial statements. The statement
calls for the board to assign priority to the factors based on the item being evaluated for presentation purposes. The
priority of the factors would be determined in the context of best meeting the objective of financial reporting. Chapter
 7 supersedes portions of Concepts Statement No. 5, Recognition and Measurement in Financial Statements of
Business Enterprises.

— To comment on this article or to suggest an idea for another article contact Jeff Drew (Jeff.Drew@aicpa-cima.com
(mailto:Jeff.Drew@aicpa-cima.com).

(https://future.aicpa.org/home)

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