Project Update

Conceptual Framework—Phase C: Measurement

Latest revisions:  As of 4, February 2008 (Updated sections are indicated with an asterisk *)

This project update summarizes the project activities and decisions of the IASB and FASB (the Boards). It was prepared by the staff and is for the information and convenience of the Boards’ constituents. All decisions of the Boards are tentative, may change at future Board meetings, and do not change current accounting and reporting requirements. Decisions of the Boards become final only after extensive due process.

*Project Objective
*Due Process Documents
*Decisions Reached at the Last Meeting
*Summary of Decisions Reached to Date
Next Steps
Board/Other Public Meetings
*Background Information
*Contact Information

*Phase C Objective

The objective of Phase C, Measurement, is to select a set of measurement bases that satisfy the objectives and qualitative characteristics of financial reporting. The Boards agreed to conduct the measurement phase in three milestones:

  • Milestone I: Inventory and Define Possible Measurement Bases

  • Milestone II: Evaluate Measurement Basis Candidates

  • Milestone III: Draw Conceptual Conclusions and Address Practical Issues.

*Due Process Documents

The Boards held roundtable discussions on measurement during January and February, 2007. The staff presented a summary of roundtable comments to the Boards in March 2007.

Summary Report
Audio Webcasts

*Decisions Reached at the Last Meeting

IASB Update November 2007
FASB Action Alert—November 21, 2007 meeting

*Summary of Decisions Reached to Date

Measurement Basis Candidates

The Boards discussed issues related to the following primary measurement basis candidates:

  1. Past entry price

  2. Past exit price

  3. Modified past amount

  4. Current entry price

  5. Current exit price

  6. Current equilibrium price

  7. Value in use

  8. Future entry price

  9. Future exit price.

The Boards generally accepted the staff recommendations for these issues. The staff prepared a summary of the Boards’ decisions regarding the above measurement basis candidates. View the executive summary and full report.

Evaluation of Basis Candidates

The Boards agreed to a revised project plan for the measurement phase in which they will consider the staff's initial evaluation of the measurement basis candidates in March 2008. In subsequent meetings, the Boards will consider issues related to selecting measurement bases for use in financial statements. The Boards’ goal is to issue a discussion paper describing their views on those issues by the end of 2008. The Boards decided to defer issues related to measurements used outside of the financial statements to a later phase of the framework project.

The Boards began deliberations with a discussion of measurement concepts, principles, and terms. The discussion was intended to help the Boards and staffs understand the nature of measurement and the differences between measurement and other processes, such as estimation, calculation, allocation, and forecasting.

The Boards also discussed the use of three criteria derived from the concepts and principles of measurement (real attribute, present attribute, and observable attribute) to evaluate measurement basis candidates. Those criteria and evaluations will be considered in conjunction with other criteria and evaluations yet to be discussed in a holistic summary and evaluation of the measurement basis candidates at the end of this milestone.

Next Steps

The staffs will further develop a decision tool for evaluating and selecting measurement bases and test it with examples to help the Boards understand how the decision tool will be applied. The staffs will also begin evaluating the measurement bases by testing them against the qualitative characteristics.

Board/Other Public Meetings

View the FASB and IASB meeting handouts, minutes, and updates.

*Background Information

The Boards expect that their joint conceptual framework project will benefit from their standard-setting projects and research being conducted by others on behalf of the Boards. Activities related to measurement include the following:

Fair Value Measurements

FASB Statement No. 157, Fair Value Measurements, defines fair value and establishes a framework for applying the fair value measurement objective in GAAP. At the September 2005 IASB meeting, the IASB added a project on fair value measurement to its agenda. The aim of the project is to provide guidance on measuring the fair value of assets and liabilities. For more information, visit IASB Fair Value Measurements Project.

*Contact Information

Kevin McBeth
FASB Project Manager
khmcbeth@fasb.org

Kenny Bement
FASB Assistant Project Manager
kbbement@fasb.org