In: Accounting
In an article for the International Journal of Accounting, Auditing and Performance Evaluation, the scholars Axel Haller and Maria Scholssgang maintained that:
"According to the Framework of the IASB, profit is a frequently used measure of an
entity's performance. Yet in developing its standards, the IASB has not paid much
attention to the presentation of profit, but primarily concentrated on recognition and
measurement requirements. As a consequence, the International (Accounting) Financial
Reporting Standards (IAS/IFRS) do not provide a sound conceptual basis for the
presentation of income and expenses.”
Do you agree or disagree with their assessment? Why? (Please limit your response to 200 words or less)
Explanation :
Agree to the assessment made by Alexander and Maria scholssgang (i.e accounting standard do not provide proper concept for presentation of profit in financial statements.)
The first and foremost accounting standard (i.e IAS-1)
presentation of financial statements States how the items will be
presented or included for the current accounting period in the
profit and loss account and excluded item to be presented in other
comprehensive income. There is no discussion on presentation of
profit in the financial statement in the accounting standard.
The IAS 18 (revenue recognisation) this accounting standard is
formed by IFRS to fulfill the criteria for revenue recognisation,
it tells us about when to recognise revenue from sale of products,
services and earned income or from divided. Even in this accounting
standard there is explanation given only about the revenue
recognisation and their is no information about presentation of
profit in the financial statement.
IAS 15 revenue from contract with customer describe how the reporter will explain the method and process to recognise the revenue from contracts with customer etc and there is no explanation on profit presentation.
At last, after studying the examples on accounting standard found by ifrs we can conclude that there is no particular accounting standard found to give guidelines for presentation of profit in the financial statements.