CMA Intermediate · Corporate Accounting and Auditing · Conceptual Framework
Sundaram Textiles Ltd must choose a measurement basis for an item and no Ind AS applies to the transaction. According to the purpose of the Conceptual Framework, how does the framework help the company?
One stated purpose of the Conceptual Framework is to help preparers develop consistent accounting policies when no Ind AS applies to a transaction or when a standard allows a choice. It does not override standards or relieve the company of developing a policy.
- AIt assists preparers in developing consistent accounting policies when no Ind AS applies to a transactionCorrect
- BIt permits the company to ignore any Ind AS that it finds costly to apply
- CIt replaces the need for the company to develop any accounting policy
- DIt requires the company to use the framework only for disclosures, not for measurement
Explanation
Paragraph SP1.1 lists as a purpose assisting preparers to develop consistent accounting policies when no Ind AS applies to a particular transaction or event, or when an Ind AS allows a choice of policy. It does not let preparers ignore standards, and it is not limited to disclosures. Measurement is one of the aspects flowing from the objective (paragraph 1.1).
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