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- But recognition of some items does not provide useful information. Recognition requirements may need to vary between Standards. An entity should recognise an asset or liability if doing so provides: relevant information; a faithful representation; and benefits that exceed costs.
www.ifrs.org/content/dam/ifrs/project/conceptual-framework/webcast-2015/cf-webcast-5-pdf.pdfChapter 4 and 5—the elements of financial statements ... - IFRS
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- Chapter 5 – Recognition and Derecognition
- Chapter 6 – Measurement
- Chapter 7 – Presentation and Disclosure
The Board has confirmed a new approach to recognition, which requires decisions to be made by reference to the qualitative characteristics of financial information. The Board has confirmed that an entity should recognise an asset or a liability (and any related income, expense or changes in equity) if such recognition provides users of financial st...
The selection of a measurement basis must take into account the key characteristics of useful financial information (relevance and faithful representation) and more particularly the characteristics of the element, the contribution to cash flows due to economic activities, and measurement uncertainty and the cost constraint. A balance is needed betw...
This is a new section, containing the principles relating to how items should be presented and disclosed. The first of these principles is that income and expenses should be included in the statement of profit or loss unless relevance or faithful representation would be enhanced by including a change in the current value of an asset or a liability ...
For recognition of an asset or a liability (that is, an item) or a group of assets and/or liabilities (that is, a group of items) created from a right or an obligation (or rights and/or obligations) that arises from ‘other events’, the probability criterion is necessary.
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7 Throughout the Conceptual Framework, the term ‘financial statements’ refers to general purpose financial statements. 8 Assets, liabilities, equity, income and expenses are defined in Table 4.1. They are the elements of financial statements.
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- The objective of general purpose financial reporting. This is the first of the two chapters that were finalised as part of the joint project with the FASB in 2010, so there are only limited changes.
- Qualitative characteristics of useful financial information. This is the second of the two chapters that were finalised as part of the joint project with the FASB in 2010 (published as Chapter 3 in the 2010 Conceptual Framework).
- Financial Statements and the reporting entity. The chapter states the objective of financial statements (to provide information about an entity's assets, liabilities, equity, income and expenses that is useful to financial statements users in assessing the prospects for future net cash inflows to the entity and in assessing management's stewardship of the entity's resources) and sets out the going concern assumption.
- The elements of financial statements. The main focus of this chapter is on the definitions of assets, liabilities, and equity as well as income and expenses.
For example, if no asset is recognised when expenditure is incurred, an expense is recognised. Over time, recognising the expense may, in some cases, provide useful information, for example, information that enables users of financial statements to identify trends.
Aug 30, 2023 · Chapter 5 sets forth recognition and derecognition criteria and guidance on when an item should be incorporated into and removed from financial statements. It provides three criteria that an item should meet to be recognized in financial statements.
