Financial measurement and Australian accounting standards

Article


Gibson, Kathy and Goyen, Michelle. 1996. "Financial measurement and Australian accounting standards." Accounting Research Journal. 9 (1), pp. 56-72.
Article Title

Financial measurement and Australian accounting standards

ERA Journal ID19067
Article CategoryArticle
AuthorsGibson, Kathy (Author) and Goyen, Michelle (Author)
Journal TitleAccounting Research Journal
Journal Citation9 (1), pp. 56-72
Number of Pages18
Year1996
Place of PublicationBrisbane, Australia
ISSN1030-9616
Web Address (URL)http://www.bus.qut.edu.au/faculty/schools/accountancy/research/accountingre/catalogue.jsp#1996
Abstract

[Abstract]: As a result of problems experienced in gaining gerneral acceptance of the fourth instalment of the Australian conceptual framework for accounting, Statement of Accounting Concepts SAC4 'Definition and reconition of the elements of financial statements' it is anticipated that a forthcoming instalment, on measurement, will also be a controversial issue.
Part of the reason for lack of acceptance of SAC4 was that it did not simply follow practice, but attempted to achieve improvements in recognition and reporting, based upon underpinning theory. As accounting is traditionally a practice-driven discipline, much of the resistance to change came from practitioners who believed that the cost of implementation of SAC4 would outweigh the benefits.
Unless the SAC on measurement closely follows current practice, it is likely that similar resistance will occur, particularly in view of the US experience in which measurement concepts were a major stumbling block in the Financial Accounting Standards Board's conceptual framework development. Although the issue of measurement in financial reporting has been discussed in both professional and academic accounting forums for decades, there is little agreement on the approach which should be adopted. This is reflected in the Australian accounting standards, where a variety of measurement methods and guidelines for applicability results in the adoption of many individual measures and combinations of measures in financial reports.
This paper summarises the measurement concepts and methods discussed in the accounting literature and identifies and classifies the individual measurements and combinations permitted by current Australian Accounting Standards. In conclusion, it discusses proposals for a measurement model which is gaining accetance within the public sector and thus may be chosen as the least controversial option, but which will nevertheless conflict with the current requirements of many of our accounting standards.

Keywordshistoric cost, current cost, net realisable value, present value, recoverable amount, fair value, SAC4, measurement, accounting, Australia
ANZSRC Field of Research 2020350103. Financial accounting
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File reproduced in accordance with the copyright policy of the publisher/author.

Byline AffiliationsUniversity of Tasmania
Faculty of Business
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