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The Failure of Decision Usefulness Approach on an Example of the New Standard for Revenue Recognition
[Selhání užitečnostního přístupu k formulaci účetních pravidel na příkladu nového standardu pro výnosy]

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  • David Procházka

Abstract

The paper focuses on critical points of the decision usefulness approach to accounting. The decision usefulness approach may work under normal economic conditions for relatively uncomplicated spheres of financial reporting. However, under extreme conditions and/or for controversial issues, the standards setters may succumb to the lobby pressure exercised by the preparers of financial statements. A wide range of users, who may flourish from accounting information, is dispersed and thus they may lack willingness to pursuit benefits from new regulation. Contrariwise, companies are relatively homogeneous and small in number, so they have sufficient incentives to influence the outcome of standard-setting process. Companies' eagerness to pressure on standard setters increases, if new regulation is expected to impact the presentation of financial position and performance in financial statements significantly. The hypothesis of potential failure of decision usefulness approach is scrutinized on an example of the new joint IASB's and FASB'S standard on Revenue from Contracts with Customers using a critical analysis approach.

Suggested Citation

  • David Procházka, 2014. "The Failure of Decision Usefulness Approach on an Example of the New Standard for Revenue Recognition [Selhání užitečnostního přístupu k formulaci účetních pravidel na příkladu nového standardu pro," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2014(3), pages 7-19.
    • Handle: RePEc:prg:jnlcfu:v:2014:y:2014:i:3:id:405:p:7-19
    DOI: 10.18267/j.cfuc.405
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    Cited by:

    1. Dana Dvořáková, 2015. "Revenue from Contracts with Costumers [Výnosy ze smluv se zákazníky]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2015(3), pages 80-96.

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    More about this item

    Keywords

    Decision Usefulness; IFRS 15; ASC Topic 606; Failure of IASB and FASB; Užitečnostní přístup k účetnictví; selhání IASB a FASB;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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