Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 24 - Full Disclosure in Financial Reporting - Review and Practice - Questions - Page 1445: 2

Answer

Full disclosure entails the thorough reporting of all the financial details that are critical in the sense that they could sway an informed reader’s decision-making process. The increase in full disclosure is attributed to various factors. First, the increasing complexities of operations in business environments relating to areas such as deferred taxes and derivatives warrant an upsurge in disclosure requirements. Secondly, users' demand for timely financial information, such as credible interim data, has increased financial disclosure requirements. Thirdly, the government has been seeking disclosures that would help control and monitor entities, thus increasing the requirement for disclosures relating to related-party transactions.

Work Step by Step

Full disclosure entails the thorough reporting of all the financial details that are critical in the sense that they could sway an informed reader’s decision-making process. The increase in full disclosure is attributed to various factors. First, the increasing complexities of operations in business environments relating to areas such as deferred taxes and derivatives warrant an upsurge in disclosure requirements. Secondly, users' demand for timely financial information, such as credible interim data, has increased financial disclosure requirements. Thirdly, the government has been seeking disclosures that would help control and monitor entities, thus increasing the requirement for disclosures relating to related-party transactions.
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