As noted above there may be assets which may be held for more than one purpose and the framework seems unclear on how these cases should be dealt with. On (d), where an entity charges for the use of assets, it is not the significance of the individual asset which is important in guiding measurement towards a current value rather than historical cost. The key factor is whether the asset is held either for the collection of the usage income, or for sale, or for both. We therefore see little reason for the CF to differentiate such assets. Q13. Measurement of liabilities We broadly agree with the preliminary views expressed. However the phrase ‘stated terms’ in (a) may need to be altered – defined benefit pension liabilities have stated terms but the amounts are very uncertain and so cash flow based measurement would be appropriate. Q14. Qualifications of the application of cost approach We agree with that even where assets are held for collection the three factors from paragraph 6.19 may mean that cost based measures may not be appropriate, for example in the case of derivatives. Q15. Other comments on measurement The framework should address the principles that might guide standards to require measurement on more than one basis. This could be where different measurement bases might be chosen in the income statements from the statement of financial position. It could also be where one basis is used for the primary statements but with disclosure of another basis in the notes. It is a shortcoming in the discussion paper that it avoids discussion of other measurement bases such as equity accounting as currently used in IFRS (see paragraph 6.5). Readers are left unsure whether these methods might fit within the three way classification in 6.37 or whether in IASB’s view these are measurement bases with no conceptual underpinning.
As noted above there may be assets which may be held for more than one purpose and the framework seems unclear on how these cases should be dealt with. On (d), where an entity charges for the use of assets, it is not the significance of the individual asset which is important in guiding measurement towards a current value rather than historical cost. The key factor is whether the asset is held either for the collection of the usage income, or for sale, or for both. We therefore see little reason for the CF to differentiate such assets. Q13. Measurement of liabilities We broadly agree with the preliminary views expressed. However the phrase ‘stated terms’ in (a) may need to be altered – defined benefit pension liabilities have stated terms but the amounts are very uncertain and so cash flow based measurement would be appropriate. Q14. Qualifications of the application of cost approach We agree with that even where assets are held for collection the three factors from paragraph 6.19 may mean that cost based measures may not be appropriate, for example in the case of derivatives. Q15. Other comments on measurement The framework should address the principles that might guide standards to require measurement on more than one basis. This could be where different measurement bases might be chosen in the income statements from the statement of financial position. It could also be where one basis is used for the primary statements but with disclosure of another basis in the notes. It is a shortcoming in the discussion paper that it avoids discussion of other measurement bases such as equity accounting as currently used in IFRS (see paragraph 6.5). Readers are left unsure whether these methods might fit within the three way classification in 6.37 or whether in IASB’s view these are measurement bases with no conceptual underpinning.
27_3171_RichardMartinACCA_0_ConceptualFrameworkResp0114.docx