Debating the methodologies of accounting for financial and non-financial contracts

• Main Author: Daniël Coetsee
• Format: Article
• Language: English
• Published: AOSIS 2007-10-01
• Series: Journal of Economic and Financial Sciences
• Subjects: accounting of contracts; accrual basis; contractual basis; executory contracts; financial instruments; measurement; performance basis; recognition; rights and obligations
• Online Access: https://jefjournal.org.za/index.php/jef/article/view/364

This article adds value to the accounting debate on the different methodologies of accounting for financial and non-financial contracts in the current and proposed new accounting pronouncements of the IASB. The paper demonstrates that significant differences exist between the recognition and measurements of non-financial contracts in terms of the traditional accrual basis of accounting and financial contracts in terms of the so-called contractual basis of accounting applied for financial instruments, even though the accounting for financial instruments is seen as an extension of the traditional accrual basis of accounting. The current IASB’s projects on liabilities, revenue recognition and the conceptual framework seem to eliminate certain differences between the two methodologies, but also raise new issues on the debate of the methodologies to account for financial and non-financial contracts.