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Business-model (intent)-based accounting

Author

Listed:
  • James Leisenring
  • Thomas Linsmeier
  • Katherine Schipper
  • Edward Trott

Abstract

We discuss how basing financial reporting on an entity's business model is, in effect, basing financial reporting on management's intent with respect to the use, transfer or other disposition of an asset or liability. We provide several examples of existing International Financial Reporting Standards and US Generally Accepted Accounting Principles that permit or require intent-based accounting. We describe the meaning and consequences of basing the accounting for financial assets on management's intentions for realising value from those assets. We analyse the positive and negative features of intent-based accounting in the context of the Financial Accounting Standards Board's and International Accounting Standards Board's conceptual frameworks, specifically, the qualitative characteristics relevance and comparability and the objective of financial reporting, and apply that analysis to existing and proposed guidance for measuring financial assets. We also discuss evidence from academic research on the measurement of financial assets.

Suggested Citation

  • James Leisenring & Thomas Linsmeier & Katherine Schipper & Edward Trott, 2012. "Business-model (intent)-based accounting," Accounting and Business Research, Taylor & Francis Journals, vol. 42(3), pages 329-344, August.
    • Handle: RePEc:taf:acctbr:v:42:y:2012:i:3:p:329-344
    DOI: 10.1080/00014788.2012.681860
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    Citations

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    Cited by:

    1. Mara Del Baldo & Maria-Gabriella Baldarelli, 2017. "Renewing and improving the business model toward sustainability in theory and practice," International Journal of Corporate Social Responsibility, Springer, vol. 2(1), pages 1-13, December.
    2. Alessandro Mechelli & Riccardo Cimini, 2021. "The effect of corporate governance and investor protection environments on the value relevance of new accounting standards: the case of IFRS 9 and IAS 39," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(4), pages 1241-1266, December.
    3. Nielsen, Christian & Roslender, Robin, 2015. "Enhancing financial reporting: The contribution of business models," The British Accounting Review, Elsevier, vol. 47(3), pages 262-274.
    4. Yonca Ertimur & Jennifer Francis & Amanda Gonzales & Katherine Schipper, 2020. "Financial Reporting for Pollution Reduction Programs," Management Science, INFORMS, vol. 66(12), pages 6015-6041, December.
    5. Hayoun, Shaul, 2019. "How fair value is both market-based and entity-specific: The irreducibility of value constellations to market prices," Accounting, Organizations and Society, Elsevier, vol. 73(C), pages 68-82.
    6. Rucsandra Moldovan, 2014. "Post-Implementation Reviews for IASB and FASB Standards: A Comparison of the Process and Findings for the Operating Segments Standards," Accounting in Europe, Taylor & Francis Journals, vol. 11(1), pages 113-137, June.
    7. Laura Girella & Roberto Tizzano & Elisa Rita Ferrari, 2019. "Concepts travelling across disciplinary fields: the case of the business model," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(2), pages 373-402, June.
    8. Mechelli, Alessandro & Cimini, Riccardo & Mazzocchetti, Francesca, 2017. "The usefulness of the business model disclosure for investors’ judgements in financial entities. A European study," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 20(1), pages 1-12.
    9. Ales Novak, 2014. "Business Model Literature Overview," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2014(1), pages 79-130.
    10. André, Paul & Filip, Andrei & Moldovan, Rucsandra, 2016. "Segment Disclosure Quantity and Quality under IFRS 8: Determinants and the Effect on Financial Analysts' Earnings Forecast Errors," The International Journal of Accounting, Elsevier, vol. 51(4), pages 443-461.
    11. Yong, Kevin Ow & Lim, Chu Yeong & Tan, Pearl, 2016. "Theory and practice of the proposed conceptual framework: Evidence from the field," Advances in accounting, Elsevier, vol. 35(C), pages 62-74.
    12. Lorenzo Simoni & Laura Bini & Francesco Giunta, 2019. "The effects of business model regulation on the value relevance of traditional performance measures. Some evidence from UK companies," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2019(1), pages 83-111.
    13. Brian Singleton-Green, 2014. "Should financial reporting reflect firms’ business models? What accounting can learn from the economic theory of the firm," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(3), pages 697-706, August.
    14. Günther Gebhardt & Araceli Mora & Alfred Wagenhofer, 2014. "Revisiting the Fundamental Concepts of IFRS," Abacus, Accounting Foundation, University of Sydney, vol. 50(1), pages 107-116, March.

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