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<p style="text-align:justify;"><span style="color:rgb(51,51,51);">Since the version of the&nbsp;Conceptual Framework for Financial Reporting is revised, the interest in&nbsp;accounting concepts that are fundamental in financial reporting has been&nbsp;growing. The purpose of this article is to investigate the evolutionary logic&nbsp;of prudence in the definitions and recognition criteria of assets and&nbsp;liabilities, the causes and consequences of new changes in the Conceptual&nbsp;Framework of 2018. As a result, it was obtained that different interpretations&nbsp;of probability and asymmetric asset and liability identification caused the new&nbsp;changes. The reconciliation between the intentions of new asset and liabilities&nbsp;definitions and their correct understanding results has been illustrated. The&nbsp;new complication in defining obligation such as “no practical ability to avoid”&nbsp;was found. In conclusion, we constant the new definitions as the positive&nbsp;consequence from a psychological point of view, simplifying individuals&nbsp;judgments, as from a conceptual point of view, leading to the common&nbsp;understanding and improvements of qualitative characteristics of financial&nbsp;information. The direct evidence of conceptual improvement is symmetric&nbsp;prudence as support of financial statements’ fundamental qualitative&nbsp;characteristics – faithful representation.</span></p>

NCAF.2021.05.03.pdf

Original Research 

NCAF.2021.05.03.xml

Symmetric Prudence in New Definitions of Conceptual Framework for Financial Reporting