Conceptual Framework for Financial Reporting

The term 'aggregation' refers to the process of sorting assets, liabilities, equity, income or expenses based on shared characteristics.

An entity has control of an economic resource if it has the ability to direct its use and obtain the economic benefits that may flow from it.

Carrying amount is the amount at which an asset, a liability or equity is recognised in the statement of financial position, minus any depreciation.

Consolidated financial statements only comprise a parent and its subsidiaries.

Derecognition refers to the process of initially recognising an asset or liability.

An economic resource is a type of liability that has the potential to produce economic benefits.

Timeliness is a enhancing qualitative characteristic of useful financial information.

A decrease in liability is an expense.

Existence uncertainty is uncertainty about the amount of an asset or liability.

Faithful representation is an enhancing qualitative characteristic of useful financial information.

An executory contract is a contract that is partially fulfilled by one party.

Equity is the residual interest in the assets of the entity after deducting all its liabilities and equity claims.

A general purpose financial report provides financial information about a specific reporting entity’s economic resources, claims against the entity, and changes in those economic resources and claims that is useful to primary users in making decisions relating to providing resources to the entity itself.

Income is a decrease in liabilities that result in decreases in equity.

A liability is a present obligation of the entity to transfer an economic resource as a result of future events.

Material information is information that is irrelevant to the primary users of general purpose financial reports.

A measurement basis is the result of applying a feature to an asset or liability and related income and expenses.

A general purpose financial report provides information about the reporting entity’s assets, liabilities, equity, income, and expenses.

Recognition in financial statements involves depicting an item in a statement alone or in aggregation with other items in words and by a non-monetary amount.

A reporting entity is an entity that is not required to prepare general purpose financial statements.

Unconsolidated financial statements are the financial statements of a parent and its subsidiaries.

A unit of account is a single right or obligation to which recognition criteria and measurement concepts are applied.

Useful financial information is financial information that is only relevant to primary users of general purpose financial reports.

Financial statements can omit some financial information if it is not considered relevant to primary users.

Offsetting arises when monetary amounts in financial reports cannot be observed directly and must instead be estimated.

Uncertainty about the amount or timing of any inflow or outflow of economic benefits that will result from an asset or liability is referred to as measurement uncertainty.

The potential to produce economic benefits is a feature that exists only in liabilities.

Primary users of general purpose financial reports include regulators and tax authorities.

The exercise of prudence allows for the understatement of assets or income or the overstatement of liabilities or expenses.

Measurement uncertainty arises when an asset and liability are grouped into a single net amount in the statement of financial position.