Question

12. What is the difference between owners' equity accounts representing sharehold- ers' claims as equity holders and shareholders' interests as owners? 13. Postulates are supposed to be tight enough to prevent conflicting conclusions being deduced from them. Is this the case with ARS 1? 14. Is it fair to categorize ARS 1 and ARS 3 as failures? Why or why not?

Answer 1

12. The concept of owner's equity representing shareholders' claims as equity holders is much weaker than owner's equity representing shareholders' interests as owners. Shareholder claims do not have any other right than the right to receive dividends declared by the board of directors, while shareholders' interests as owners also have a right to vote apart from right to receive dividends.

13. This case is definitely not with ARS 1 because an exit value system - a general price level adjustment - could easily have been deduced from it.

14. No, it is not fair to categorize as failures. ARS 1 and ARS 3 should be seen in historical context when they arose. After years of putting out mobilisation, it was suddenly decided for a more complex approach. User objectives had not yet met.  The practicing arm of the profession did not used anything except historical cost.