Definitions Flashcards
Income definition IASB
Increases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims.
Expenses definition IASB
Decreases in assets or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims.
Profit or losses definition IASB
Increases in equity not resulting from contributions from holders of equity claims.
Decreases in equity not resulting from distributions to holders of equity claims.
Assets definition IASB
A present economic resource controlled by the entity as a result of past events.
An economic resource is a right that has the potential to produce future economic
benefits
Liability definition IASB
A present obligation of the entity to transfer an economic resource as a result of past events.
An obligation is a duty or responsibility that the entity has no practical ability to avoid.
Equity definition IASB
Residual interest in the assets of the entity after deducting all its liabilities
The Conceptual Framework for Financial Reporting
Sets out the underlying concepts for the preparation and presentation of financial statements. It also requires that users of financial information can interpret a company’s financial statements, knowing that they have been prepared in the correct way.
Business entity
Financial statements record and report on the activities of one particular entity. They do not include the personal assets or liabilities of those who own or run the entity.
Going Concern
Financial statements are prepared on the assumption that the entity will remain in business for the foreseeable future
Accruals basis
Transactions are recorded and reported in the financial statements of the periods to which they relate.
Materiality
Information is material if omitting it or misstating it could influence decisions that users make on the basis of financial information about a specific reporting entity (materiality is an entity-specific aspect of relevance).
Relevance (qualitative characteristic)
- Information capable of making a difference in the decisions made by the users
- Have predictive value
- Have confirmatory value
Faithful representation (qualitative characteristic)
- information must be complete
- Neutral
- Free from error
Recognition
Process of including an element in the financial statements. If they meet the definition of an asset, liability, income or expense and provide information that is useful to users.
Measurement
Process of determining the money amounts at which the elements are to be recognised and carried in the financial statements.
IAS 1
Presentation of Financial Statements
IAS 16
Property, plant and equipment
Leases definition (IAS16)
“A contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration”.
IAS36
Impairment of Assets
Property, plant and equipment (PPE)
Tangible items that are held for use by the
business and that are expected to be used during more than one period
Cost (in relation to PPE)
Amount of cash or cash equivalents paid, or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction
Fair value (PPE)
The price that would be received to sell an asset
Depreciable amount
The cost of an asset less its residual value
Residual value
The estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its
useful life.
