Accounting Update Offers Guidance on Financial Item Recognition

The US accounting standard-setter published new concepts Wednesday for when an item should be incorporated into and removed from financial statements, for the internal handbook it uses to set consistent accounting rules.

The concepts, issued as Chapter 5 of FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, cover recognition and “derecognition” of items. The concepts and definitions don’t directly affect accounting for the US companies and not-for-profit organizations that use the Financial Accounting Standards Board’s accounting standards. Instead, the concepts update the board’s Conceptual Framework, an internal reference guide FASB is supposed to consult when it draws ...