Conceptual Framework - IFRS Flashcards
Fundamental Qualitative Characteristics of Useful Financial Information
Relevance
Predictive Value
Confirmatory Value
Materiality
Faithful Representation
Complete
Neutral
Free from Error
Enhancing Qualitative Characteristics of Useful Financial Information
Comparability
Consistency
Verifiability
Timeliness
Understandability
Cost Constraint
Information that confirms or changes previous previous evaluations
Confirmatory Value
Information that helps users to predict future outcomes
Predictive Value
Information is material if omitting, misstating or obscuring it could influence decisions that users make
Materiality
Refers to the use of the same methods for the same items
Consistency
Assess whether the benefits of reporting particular information are likely to justify the costs incurred to provide and use that information
Cost Constraint
If reporting entity comprises both the parent and its subsidiaries
Consolidated F/S
If reporting entity is parent alone
Unconsolidated F/S
If reporting entity comprises two or more entities that are not linked by a parent-subsidiary relationship
Combined F/S
Criteria to define as Asset (4.3-4.5)
Right
Control
Potential to produce economic benefits
Criteria to define a Liability (4.26-4.27)
Entity has an obligation
Obligation is to transfer an economic resource
Obligation is a present obligation that exists as a result of past events
Residual interest int he assets after deducting liabilities (4.63)
Equity
Increases in assets or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims
Income
Decreases in assets or increases in liabilities, that result in decreases in equity other than those relating to distributions to holders of equity claims
Expenses
The process of capturing for inclusion in the F/S an item that meets the definition of one of the elements - asset, liability, equity, income or expenses (5.1)
Recognition
The removal of all or part of a recognized asset/liability from an entity’s statement of financial position (5.26)
Derecognition
The amount at which an asset, a liability or equity is recognized in the statement of financial position is referred to as its (5.1)
Carrying Amount
Derecognition of Asset
when the entity loses control of all or part of the recognized asset
Derecognition of LIability
when the entity no longer has a present obligation for all or part of the recognized liability
Measurement base (6.4)
Historical Cost
Current Value
Fair Value
Value in use for assets/fulfillment value for liabilities
Current Cost
Historical Cost for an asset (6.5)
consideration paid PLUS transaction costs
Historical cost is updated over time for
- Depreciation/amortization
- Payments received that extinguish part or all of the assets
- Impairment
- Accrual of interest to reflect any financing component of the asset
Historical cost for a liability
consideration received to incur or take on the liability LESS transaction cost.
Price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date (6.12)
Fair Value
Indirect methods must reflect ALL of the following factors (6.14)
- Estimates of future cash flows
- Possible variations in the estimated amount or timing of future cash flows, caused by inherent uncertainty, including credit risk
- Time value of money
- Risk premium or discount for uncertainty
5.3 Other factors (e.g. liquidity)
Present value of cash flows, or other economic benefits, that an entity expects to derive from the use of an asset and its ultimate disposal (6.17)
Value in use
Present value of the cash, or other economic resources, that an entity expects to be obliged to transfer as it fulfills a liability (6.17)
Fulfilment value
Cost of an equivalent asset at the measurement date, comprising the consideration that would be paid PLUS transaction costs (6.21)
Current cost of an asset
Consideration that would be received for an equivalent liability at the measurement date LESS transaction costs (6.21)
Current cost of a liability
An entry unlike fair value and value in use / fulfilment value which are exit values (6.21)
Current value
