Pervasive topics Flashcards
(28 cards)
Public interest/ liability?
debt/ equity instruments trade in public market (or process of issuing such intruments) Public market = listed
or
keeps assets in fiduciary capacity for wide group outside parties as part of primary business activities
fiduciary capacity?
someone handles money and/ or property on behalf of someone else
IFRS?
International Financial Reporting Standards
Conceptual framework purpose?
- describes objective for general purpose financial reporting
- to assits the IASB in developing and revising IFRSs that are based on consistent concepts
- to help preparers to develop consistent accounting policies
- assist all parties to understand andinterpret IFRS
Framework is not a stanards and does not override any specific IFRS
objective of general purpose financial reporting?
conceptual framework
to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions relating to
providing resources to the entity.
Those decisions involve decisions about:
(a) buying, selling or holding equity and debt instruments;
(b) providing or settling loans and other forms of credit
Qualitative chaacteristics of useful financial information 2.4?
conceptual framework
If financial information is to be useful, it must be relevant and faithfully represent what it purports to represent. The usefulness of financial information is enhanced if it is comparable, verifiable, timely and understandable
materiality (2.11)?
conceptual framework
Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial reports make on the basis of those reports, which provide financial information about a specific reporting entity.
faithful representation (2.12)?
conceptual framework
To be useful, financial information must not only represent relevant phenomena, but it must also faithfully represent the substance of the phenomena that it purports to represent.
financial statements and the reporting entity (3.2)?
conceptual framework
The objective of financial statements is to provide financial information about the reporting entity’s assets, liabilities, equity, income and expenses that is useful to users of financial statements in assessing the prospects for future net cash inflows to the reporting entity and in assessing management’s stewardship of the entity’s economic resources.
financial statements are?
conceptual framework
- reported for a specified period of time (reporting period)
- from the perspective of the reporting entity (not investors, lenders or other creditors)
- prepared on the assumption that the reporting entity is a going concern
definition
asset?
conceptual framework
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 economic benefits
defintion
liability?
conceptual framework
a present obligation of the entity to transfer an economic resource as a result of past events
defintion
equity?
conceptual framework
the residual interest in the asset of the entity after deducting all its liabilities
definition
income?
conceptual framework
increases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims
definition
expenses?
conceptual framework
decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims
recognition (5.7)?
conceptual framework
Not recognising an item that meets the definition of one of the elements makes the statement of financial position and the statement(s) of financial performance less complete and can exclude useful information from financial statements.
On the other hand, in some circumstances, recognising some
items that meet the definition of one of the elements would not provide useful information
asset/ liability recognition (5.7)?
conceptual framework
An asset/ liability is recognised only if recognition of
that asset/ liability and of any resulting income, expenses or changes in equity provides users of financial statements with information that is useful,
ie with:
(a) relevant information about the asset/ liability and about any
resulting income, expenses or changes in equity; and
(b) a faithful representation of the asset/ liability and of any resulting income, expenses or changes in equity
faithful representation?
conceptual framework
consider if cost is reliably measureable
relevant?
conceptual framework
consider probability of in-/ out flow of economic resources
derecognition?
conceptual framework
removal of all/ part of recognised asset/ liability from SFP
normally when item no longer meets definition
accounting requirements for derecognition?
conceptual framework
aim to faithfully represent both
- any asset/ liability retained after the transaction/ event
and
- the change in entity’s assets/ liabilities as a result og that transaction/ event
measurement
historical cost (6.4)?
conceptual framework
Historical cost measures provide monetary information about assets, liabilities and related income and expenses, using information derived, at least in part, from the price of the transaction or other event that gave rise to them. Unlike current value, historical cost does not reflect changes in values, except to the extent that those changes relate to impairment of an asset or a liability becoming onerous
current value (6.10, 6.11)?
Conceptual framework
- provides monetary information about assets, liabilities and related income and expenses, using information updated to reflect conditions at the measurement date.
- reflect changes since the previous measurement date
- Current value measurement bases include:
(a) fair value
(b) value in use for assets and fulfilment value for liabilities
(c) current cost
IAS 1?
presentation of financial statements
