The Conceptual Framework Flashcards
What are the 6 characteristics of the conceptual framework?
Relevance
Faithful representation
Timeliness
Comparability
Verifiability
Understanding
What is the definition of an “Asset”?
A present economic resource controlled by an entity as a result of a past event
What is the definition of a “Liability”?
A present obligation of the entity to transfer an economic resource as a result of a past event
When can items be recognised in the financial statements?
If they meet the definition of the elements
When should items be derecognised in the financial statements?
When the entity loses control of the asset or,
has no present obligation for the liability
How are items measured in the financial statements?
Historical cost, or Current value (fair value, value-in-use, and current cost)
How is relevance maximised?
When the following is considered when measuring:
- the characteristics of the asset/liability
- how the asset/liability contributes to future cash flows
