Title: Deconstructing an accounting paradigm shift: AASB 116 non-current asset measurement models

Authors: Gregory K. Laing; Ronald W. Perrin

Addresses: School of Business, Faculty of Arts & Business, University of the Sunshine Coast, Maroochydore DC, QLD 4558, Australia ' School of Accounting & Finance, Faculty of Commerce, University of Wollongong, Wollongong NSW 2522, Australia

Abstract: This paper is a deconstruction of the cost and fair value models implicit in the Australian Accounting Standard (AASB 116), derived from the International Accounting Standard IAS 16. The paper examines the justification for the paradigm shift through the lens of the very framework that supports each accounting model. The analysis renders visible the contradictions embedded in the models, raising serious doubts about the ability of either model to provide financial information that is sufficiently relevant or reliable to be any more useful to potential users than the historical cost model that they have usurped. In this regard the standard fails to provide any benefits to warrant the paradigm shift.

Keywords: deconstruction; asset measurement; non-current assets; AASB 116; cost modelling; fair value model; historical cost model; Australian Accounting Standards; financial information.

DOI: 10.1504/IJCA.2014.068404

International Journal of Critical Accounting, 2014 Vol.6 No.5/6, pp.509 - 519

Published online: 15 Apr 2015 *

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