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Exploring the Application of FASB’S “Asset and Liability View” in Standard-Setting

Michael J. Fischer and Victoria S. Vega

The BRC Academy Journal of Business

Volume 13

Number 1

Print ISSN: 2152-8721 Online ISSN: 2152-8721

Date: April 15, 2023

First Page 71

Last Page 90

DOI: https://dx.doi.org/10.15239/j.brcacadjb.2023.13.01.ja03

Abstract

Among the objectives of the Financial Accounting Standards Board’s (FASB’s) Conceptual Framework was to provide guidance for the FASB’s own future standard-setting efforts. One of the major choices made by the FASB when developing its Conceptual Framework was the adoption of the “asset and liability view” of income determination in Statement of Financial Accounting Concepts No. 3 (SFAC 3). Anecdotal evidence indicates that the asset and liability view is central to several prominent standards issued by the FASB since SFAC 3. However, there has not been a thorough analysis of the application of the asset and liability view in standard-setting. This paper begins to close this lacuna in the literature. Specifically, we report on a systematic examination of citations of the asset and liability view in FASB standards since the issuance of SFAC 3 in December 1980

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