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The Equity Theories and the IASB Conceptual Framework

van Mourik, Carien (2014). The Equity Theories and the IASB Conceptual Framework. Accounting in Europe, 11(2) pp. 219–233.

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The International Accounting Standards Board (IASB) staff members ‘recommend that the IASB confirm its view that financial statements should be presented from the perspective of the entity as a whole’ [IASB (2014) Agenda Paper 10E Project – The Conceptual Framework. Reporting Entity – Perspective. London: The International Accounting Standards Board. May 2014. Available at: (accessed 9 July 2014), para. 28], which implies adoption of the Entity Theory. This paper explains the value judgements and arguments supporting the main equity theories and their perspectives on financial performance and financial position. It identifies Residual Equity Theory, instead of Entity Theory, as the dominant equity theory in the 2010 IASB Framework and the 2013 IASB Exposure Draft. Hence, there is a discrepancy between the perspective from which the IASB thinks financial statements should be presented and the perspective actually underlying the definition, recognition and measurement of the elements of financial statements in the IASB's Framework and Exposure Draft. Finally, this paper argues for a careful reconsideration and justification of the equity theory the IASB chooses as the basis for its Conceptual Framework.

Item Type: Journal Item
Copyright Holders: 2014 European Accounting Association
ISSN: 1744-9499
Academic Unit/School: Faculty of Business and Law (FBL) > Business > Department for Accounting and Finance
Faculty of Business and Law (FBL) > Business
Faculty of Business and Law (FBL)
Item ID: 48696
Depositing User: Catharina Van Mourik
Date Deposited: 27 Feb 2017 12:36
Last Modified: 07 Dec 2018 10:49
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