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The Framework described as a concept that underlie in the financial statement which is focus on interpretation, address, classify, preparation, and presentation each of company transactions that can change the company value and financial report. The frameworks deal with the objective of financial statements, qualitative characteristics the information to be usefulness, definition and recognition of financials statements’ elements. Therefore, framework develops the accounting standards to correct the accounting errors and estimates and adjudicate a particular item in an appropriated way. But the framework is not an accounting standard, thus framework doesn’t override any accounting standards. Incidentally, framework does the consistency of accounting regulations and accounting standards which is related to the financial reports. Therefore, framework indirectly assists the user of financial reports to understand and interpreting information that present in the financial reports. (Clift & Navaratnam 1991, p653).

(i) Discuss the benefit of having a conceptual framework of accounting. The accounting conceptual framework will bring a lot of benefit for the auditor, accountant, and user when preparing and using the financial reports. To having a conceptual framework will bring the advantages like easily to interpretation and classify the company’s information to procedures relating of presentation of financial reports users in order to make the related resources allocation or economic decisions. (Clift & Navaratnam 1991, p653). An accounting conceptual framework had becomes a guideline to development, objective, and specification the accounting standards and financial reports. The framework develops a set of accounting standards to ensure internally consistency, which is becomes a filter to identification and recognition all the financial elements it is before recognize in the financial reports. Framework was also corrects and revises the different elements and definition, preparing and presentation the company’s financial position in the appropriate way. The elements of entity recognize by appropriate standards result in a manner of internally consistency and coherent in the accounting standards and financial reports. (Kaminski & Carpenter 2011, p16) The basic elements of financial statements which is including assets, liabilities, equity, income and expenses. Say assets, an asset could be recognized in financial reports when the asset is control by the entity, high probability to bring the future economic benefit flow into company, and the cost of assets can be measure reliably. Eventually, an asset can be recognized in the financial statements when it is met both of probability and reliable criteria. In the other hand, liability also similar to the assets which is recognized when there is high probability outflow of entity’s resources in term of monetary or other valuable things that can be measure reliable, and result in the present economic obligations. (Picker et al. 2009, p47-48) Therefore, framework provided the internally consistency to financial reports that enables users to compare between the entity’s performance in the efficiently way if the both entity are using the same accounting standards and period to period. (Clift & Navaratnam 1991, p659) The Framework become a reference to resolving and deals with the accounting issues which is interpreting indirectly in accounting standards in a vague way or may absences in accounting standards when preparing financial reports. Because it is hard for the accounting standards to provide all the solution to solve accounting issues, thus framework, point out the frontier of measurement and judgment for all elements in the financial reports which is no address in the standards. Therefore, preparers would not use their own experience to adjudicate the accounting issues through their own “standard”. (Picker et al. 2009, p30)

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