Why Revise the Conceptual Framework?
The existing Conceptual Framework was written by FASB in the 1970s and 1980s. When issued, it represented a significant advancement of accounting thought and provided a basis for the transformation of financial reporting standards through the adoption of the asset-liability view. The asset-liability view represented a departure from the traditional view that accounting should focus on the measurement of income through the matching of costs with revenues. In contrast, the asset-liability view focuses on defining and measuring assets and liabilities, determining income via changes in these balance sheet accounts. The asset-liability view is based on the logic that it is necessary to define and measure the beginning and end points (the balance sheet) of a transition before measuring the transition (the income statement) itself. Standards setters, including FASB, have long preferred the asset-liability view of accounting because the focus on income measurement proved to be inconsistent wit
