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A research note

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  • Peter Walton

Abstract

The paper contributes to the research agenda of studies on accounting measurement by suggesting that incremental change is taking place in IFRS which has the effect of moving recognition of assets and liabilities to an earlier point in the transaction cycle. This is manifested in recognition of executory contracts and changes in economic state in some standards. The professional debate about fair value obscures the underlying boundary shift. Fair value is used to simulate completion of the transaction cycle. The use of fair value in this way is accompanied by a change in emphasis as to how reliability should be construed, with representational faithfulness being advanced over verifiability. The recognition of income and expense earlier in the cycle is corrected on final realization, so the overall profits or losses of the entity are not changed, although recognition may take place in different periods than under historical cost.

Suggested Citation

  • Peter Walton, 2006. "A research note," Accounting and Business Research, Taylor & Francis Journals, vol. 36(4), pages 337-343.
    • Handle: RePEc:taf:acctbr:v:36:y:2006:i:4:p:337-343
    DOI: 10.1080/00014788.2006.9730031
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    References listed on IDEAS

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    1. Aboody, David & Barth, Mary E. & Kasznik, Ron, 1999. "Revaluations of fixed assets and future firm performance: Evidence from the UK1," Journal of Accounting and Economics, Elsevier, vol. 26(1-3), pages 149-178, January.
    2. repec:dau:papers:123456789/1420 is not listed on IDEAS
    3. Barth, Mary E. & Landsman, Wayne R. & Wahlen, James M., 1995. "Fair value accounting: Effects on banks' earnings volatility, regulatory capital, and value of contractual cash flows," Journal of Banking & Finance, Elsevier, vol. 19(3-4), pages 577-605, June.
    4. Hines, Ruth D., 1988. "Financial accounting: In communicating reality, we construct reality," Accounting, Organizations and Society, Elsevier, vol. 13(3), pages 251-261, April.
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    Cited by:

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    2. Laura Girella & Mario Abela & Elisa Rita Ferrari, 2018. "Conceptual shifts in accounting: Transplanting the notion of boundary from financial to non-financial reporting," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2018(1), pages 133-175.
    3. David Barber & Matthew Asplin & Tim Papakyriakou & Lisa Miller & Brent Else & John Iacozza & C. Mundy & M. Gosslin & Natalie Asselin & Steve Ferguson & Jennifer Lukovich & Gary Stern & Ashley Gaden & , 2012. "Consequences of change and variability in sea ice on marine ecosystem and biogeochemical processes during the 2007–2008 Canadian International Polar Year program," Climatic Change, Springer, vol. 115(1), pages 135-159, November.
    4. Pier Luigi Marchini & Carlotta D'Este, 2015. "Comprehensive Income: which potential effects on firms? performance evaluation and users? decision process?," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2015(2), pages 55-94.

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