Respondent

Definition

Accounting Standards Board of Japan-ASBJ

We believe that it would be very helpful if the Conceptual Framework explained whether, and if so how, recognition, measurement, and presentation and disclosures should differ depending on how cash flow is to be generated and how value is to be created. Accordingly, regardless of whether the term business model is used in the Conceptual Framework, we recommend that the revised Conceptual Framework include relevant discussions using the notions stated in the previous paragraph.

Asian-Oceanian Standard-Setters Group-AOSSG

Yet there is a mixed view as to whether the concept can be practically defined in the Conceptual Framework. The IASB could consider: 1) describing the concept of the business model as “how an entity conducts its business activities”, 2) explaining how such a notion would enhance the achievement of the qualitative characteristics of useful financial information; and 3) incorporating the notion in relevant chapters of the Conceptual Framework, most notably, the Measurement chapter (refer our comments in paragraph 43 above). Some AOSSG members think the role of the business model concept should, at least in part, be determined or heavily influenced by other concepts―for example, by an identified ideal concept of wealth, in relation to measurement. Arguably, an entity’s operating capability, which represents the entity’s ability to carry out its activities at the scale determined by its then-existing resources, is the ideal concept of wealth that should be adopted in financial statements, on the basis that it provides the most useful information for helping users to predict an entity’s future cash flows. These members believe that applying that concept of wealth would provide insights into the consequences of the entity’s business model.