PracticeConsultingUS accounting standards board pushes for present value as basis for accounting

US accounting standards board pushes for present value as basis for accounting

The US Financial Accounting Standards Board has released its first concepts statement that provides a framework for using future cash flows and present value as the basis for accounting measurement.

The statement marks the culmination of consideration to comments received from two exposure drafts published in 1997 and 1999 and applies to measurements that use cash flow information on the initial recognition of assets or liabilities, in fresh measurements, or in interest methods of allocation.

Senior project manager Wayne Upton said: ‘This is the first concepts statement to address specific measurement and to articulate a measurement objective.’

The statement describes techniques for estimating cash flows and interest rates, the role of risk and uncertainty, and the application of present value in the measurement of liabilities.

www.fasb.org.uk

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