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Here are the unaccompanied IFRS Standards, IAS Standards and interpretations as of 1

January 2016:
IFRS
IAS
IFRIC
SIC
Preface
IAS 1
IFRIC 1
SIC 7
Presentation of
Changes in Existing
Introduction of the
Financial Statements Decommissioning,
Euro
Restoration and Similar
Liabilities
Framework
IAS 2
IFRIC 2
SIC 10
Inventories
Members' Shares in CoGovernment
operative Entities and
AssistanceNo
Similar Instruments
Specific Relation to
Operating Activities
IFRS 1
IAS 7
IFRIC 5
SIC 25
First-time Adoption Statement of Cash
Rights to Interests arising Income Taxes
of International
Flow
from Decommissioning,
Changes in the Tax
Financial Reporting
Restoration and
Status of an Entity
Standards
Environmental
or its Shareholders
Rehabilitation Funds
IFRS 2
IAS 8
IFRIC 6
SIC 29
Share-based
Accounting Policies,
Liabilities arising from
DisclosureService
Payment
Changes in Accounting Participating in a Specific Concession
Estimates and Errors MarketWaste Electrical Arrangements
and Electronic Equipment
IFRS 3
IAS 10
IFRIC 7
SIC 32
Business
Events after the
Applying the Restatement Intangible Assets
Combinations
Reporting Period
Approach under IAS 29
Website Costs
IFRS 4
IAS 12
IFRIC 10
Insurance
Income Taxes
Interim Financial
Contracts
Reporting and
Impairment
IFRS 5
IAS 16
IFRIC 12
Non-current Assets Property, Plant and
Service Concession
Held for Sale and Equipment
Arrangements
Discontinued
Operations
IFRS 6
IAS 19
IFRIC 14
Exploration for
Employee Benefits
IAS 19The Limit on a
and Evaluation of
Defined Benefit Asset,
Mineral Resources
Minimum Funding
Requirements and their
Interaction
IFRS 7
IAS 20
IFRIC 16
Financial
Accounting for
Hedges of a Net
Instruments:
Government Grants
Investment in a Foreign
Disclosures
and Disclosure of
Operation
Government
Assistance
IFRS 8
IAS 21
IFRIC 17
Operating
The Effects of
Distributions of Non-cash

Segments
IFRS 9
Financial
Instruments
IFRS 10
Consolidated
Financial
Statements
IFRS 11
Joint
Arrangements

IFRS 12
Disclosure of
Interest in Other
Entities
IFRS 13
Fair Value
Measurement

Changes in Foreign
Exchange Rates
IAS 23
Borrowing Costs

IAS 24
Related Party
Disclosure
IAS 26
Accounting and
Reporting by
Retirement Benefit
Plans
IAS 27
Separate Financial
Statements

IAS 28
Investments in
Associates and Joint
Ventures
IFRS 14
IAS 29
Regulatory
Financial Reporting in
Deferral Accounts Hyperinflationary
Economies
IFRS 15
IAS 32
Revenue from
Financial Instruments:
Contracts with
Presentation
Customers
IFRS 16
IAS 33
Leases
Earnings per Share
IAS 34
Interim Financial
Reporting
IAS 36
Impairment of Assets
IAS 37
Provisions, Contigent
Liabilities and
Contingent Assets
IAS 38
Intangible Assets
IAS 39
Financial Instruments:
Recognition and
Measurement
IAS 40

Assets to Owners
IFRIC 19
Extinguishing Financial
Liabilities with Equity
Instruments
IFRIC 20
Stripping Costs in the
Production Phase of a
Surface Mine
IFRIC 21
Levies

Investment Property
IAS 41
Agriculture
PHILIPPINE ACCOUNTING STANDARDS 1
PRESENTATION OF FINANCIAL STATEMENTS
Objective of PAS 1
The objective of IAS 1 (revised 1997) is to prescribe the basis for presentation of general
purpose financial statements, to ensure comparability both with the entity's financial
statements of previous periods and with the financial statements of other entities. IAS 1
sets out the overall framework and responsibilities for the presentation of financial
statements, guidelines for their structure and minimum requirements for the content of
the financial statements. Standards for recognising, measuring, and disclosing specific
transactions are addressed in other Standards and Interpretations.
Scope
Applies to all general purpose financial statements based on International Financial
Reporting Standards. [IAS 1.2]
General purpose financial statements are those intended to serve users who do not have
the authority to demand financial reports tailored for their own needs. [IAS 1.3]
Objective of Financial Statements
The objective of general purpose financial statements is to provide information about the
financial position, financial performance, and cash flows of an entity that is useful to a
wide range of users in making economic decisions. To meet that objective, financial
statements provide information about an entity's: [IAS 1.7]
Assets.
Liabilities.
Equity.
Income and expenses, including gains and losses.
Other changes in equity.
Cash flows.
That information, along with other information in the notes, assists users of financial
statements in predicting the entity's future cash flows and, in particular, their timing and
certainty.
Components of Financial Statements
A complete set of financial statements should include: [IAS 1.8]
* a balance sheet,
* income statement,
* a statement of changes in equity showing either:
o all changes in equity, or

o changes in equity other than those arising from transactions with equity holders acting
in their capacity as equity holders;
* cash flow statement, and
* notes, comprising a summary of accounting policies and other explanatory notes.
Reports that are presented outside of the financial statements -- including financial
reviews by management, environmental reports, and value added statements -- are
outside the scope of IFRSs. [IAS 1.9-10]
Fair Presentation and Compliance with IFRSs
The financial statements must "present fairly" the financial position, financial
performance and cash flows of an entity. Fair presentation requires the faithful
representation of the effects of transactions, other events, and conditions in accordance
with the definitions and recognition criteria for assets, liabilities, income and expenses set
out in the Framework. The application of IFRSs, with additional disclosure when
necessary, is presumed to result in financial statements that achieve a fair presentation.
[IAS 1.13]
IAS 1 requires that an entity whose financial statements comply with IFRSs make an
explicit and unreserved statement of such compliance in the notes. Financial statements
shall not be described as complying with IFRSs unless they comply with all the
requirements of IFRSs (including Interpretations). [IAS 1.14]
Inappropriate accounting policies are not rectified either by disclosure of the accounting
policies used or by notes or explanatory material. [IAS 1.16]
IAS 1 acknowledges that, in extremely rare circumstances, management may conclude
that compliance with an IFRS requirement would be so misleading that it would conflict
with the objective of financial statements set out in the Framework. In such a case, the
entity is required to depart from the IFRS requirement, with detailed disclosure of the
nature, reasons, and impact of the departure. [IAS 1.17-18]
Going Concern
An entity preparing IFRS financial statements is presumed to be a going concern. If
management has significant concerns about the entity's ability to continue as a going
concern, the uncertainties must be disclosed. If management concludes that the entity is
not a going concern, the financial statements should not be prepared on a going concern
basis, in which case IAS 1 requires a series of disclosures. [IAS 1.23]
Accrual Basis of Accounting
IAS 1 requires that an entity prepare its financial statements, except for cash flow
information, using the accrual basis of accounting. [IAS 1.25]
Consistency of Presentation
The presentation and classification of items in the financial statements shall be retained
from one period to the next unless a change is justified either by a change in
circumstances or a requirement of a new IFRS. [IAS 1.27]
Materiality and Aggregation

Each material class of similar items must be presented separately in the financial
statements. Dissimilar items may be aggregated only if the are individually immaterial.
[IAS 1.29]
Offsetting> Assets and liabilities, and income and expenses, may not be offset unless
required or permitted by a Standard or an Interpretation. [IAS 1.32]
Comparative Information
IAS 1 requires that comparative information shall be disclosed in respect of the previous
period for all amounts reported in the financial statements, both face of financial
statements and notes, unless another Standard requires otherwise. [IAS 1.36]
If comparative amounts are changed or reclassified, various disclosures are required. [IAS
1.38]
Structure and Content of Financial Statements in General
Clearly identify: [IAS 1.46]
*
*
*
*
*
*

the financial statements


the reporting enterprise
whether the statements are for the enterprise or for a group
the date or period covered
the presentation currency
the level of precision (thousands, millions, etc.)

Reporting Period
There is a presumption that financial statements will be prepared at least annually. If the
annual reporting period changes and financial statements are prepared for a different
period, the enterprise must disclose the reason for the change and a warning about
problems of comparability. [IAS 1.49]
Balance Sheet
An entity must normally present a classified balance sheet, separating current and
noncurrent assets and liabilities. Only if a presentation based on liquidity provides
information that is reliable and more relevant may the current/noncurrent split be
omitted. [IAS 1.51] In either case, if an asset (liability) category commingles amounts that
will be received (settled) after 12 months with assets (liabilities) that will be received
(settled) within 12 months, note disclosure is required that separates the longer-term
amounts from the 12-month amounts. [IAS 1.52]
Current assets are cash; cash equivalent; assets held for collection, sale, or consumption
within the enterprise's normal operating cycle; or assets held for trading within the next
12 months. All other assets are noncurrent. [IAS 1.57]
Current liabilities are those to be settled within the enterprise's normal operating cycle or
due within 12 months, or those held for trading, or those for which the entity does not
have an unconditional right to defer payment beyond 12 months. Other liabilities are
noncurrent. [IAS 1.60]

Long-term debt expected to be refinanced under an existing loan facility is noncurrent,


even if due within 12 months. [IAS 1.64]
If a liability has become payable on demand because an entity has breached an
undertaking under a long-term loan agreement on or before the balance sheet date, the
liability is current, even if the lender has agreed, after the balance sheet date and before
the authorisation of the financial statements for issue, not to demand payment as a
consequence of the breach. [IAS 1.65] However, the liability is classified as non-current if
the lender agreed by the balance sheet date to provide a period of grace ending at least
12 months after the balance sheet date, within which the entity can rectify the breach
and during which the lender cannot demand immediate repayment. [IA 1.66]
Minimum items on the face of the balance sheet [IAS 1.68]
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

(a) property, plant and equipment;


(b) investment property;
(c) intangible assets;
(d) financial assets (excluding amounts shown under (e), (h) and (i));
(e) investments accounted for using the equity method;
(f) biological assets;
(g) inventories;
(h) trade and other receivables;
(i) cash and cash equivalents;
(j) trade and other payables;
(k) provisions;
(l) financial liabilities (excluding amounts shown under (j) and (k));
(m) liabilities and assets for current tax, as defined in IAS 12;
(n) deferred tax liabilities and deferred tax assets, as defined in IAS 12;
(o) minority interest, presented within equity; and
(p) issued capital and reserves attributable to equity holders of the parent.

Additional line items may be needed to fairly present the entity's financial position. [IAS
1.69]
IAS 1 does not prescribe the format of the balance sheet. Assets can be presented current
then noncurrent, or vice versa, and liabilities and equity can be presented current then
noncurrent then equity, or vice versa. A net asset presentation (assets minus liabilities) is
allowed. The long-term financing approach used in UK and elsewhere fixed assets +
current assets - short term payables = long-term debt plus equity is also acceptable.
Regarding issued share capital and reserves, the following disclosures are required: [IAS
1.76]
*
*
*
*
*
*
*

numbers of shares authorised, issued and fully paid, and issued but not fully paid
par value
reconciliation of shares outstanding at the beginning and the end of the period
description of rights, preferences, and restrictions
treasury shares, including shares held by subsidiaries and associates
shares reserved for issuance under options and contracts
a description of the nature and purpose of each reserve within owners' equity

Income Statement

In the 2003 revision to IAS 1, the IASB is now using "profit or loss" rather than "net profit
or loss" as the descriptive term for the bottom line of the income statement.
All items of income and expense recognised in a period must be included in profit or loss
unless a Standard or an Interpretation requires otherwise. [IAS 1.78]
Minimum items on the face of the income statement should include: [IAS 1.81]
* (a) revenue;
* (b) finance costs;
* (c) share of the profit or loss of associates and joint ventures accounted for using the
equity method;
* (d) a single amount comprising the total of (i) the post-tax profit or loss of discontinued
operations and (ii) the post-tax gain or loss recognised on the disposal of the assets or
disposal group(s) constituting the discontinued operation; and;
* (e) tax expense; and
* (f) profit or loss.
The following items must also be disclosed on the face of the income statement as
allocations of profit or loss for the period: [IAS 1.82]
* (a) profit or loss attributable to minority interest; and
* (b) profit or loss attributable to equity holders of the parent.
Additional line items may be needed to fairly present the enterprise's results of
operations.
No items may be presented on the face of the income statement or in the notes as
"extraordinary items". [IAS 1.85]
Certain items must be disclosed either on the face of the income statement or in the
notes, if material, including: [IAS 1.87]
* (a) write-downs of inventories to net realisable value or of property, plant and
equipment to recoverable amount, as well as reversals of such write-downs;
* (b) restructurings of the activities of an entity and reversals of any provisions for the
costs of restructuring;
* (c) disposals of items of property, plant and equipment;
* (d) disposals of investments;
* (e) discontinuing operations;
* (f) litigation settlements; and
* (g) other reversals of provisions.
Expenses should be analysed either by nature (raw materials, staffing costs, depreciation,
etc.) or by function (cost of sales, selling, administrative, etc.) either on the face of the
income statement or in the notes. [IAS 1.88] If an enterprise categorises by function,
additional information on the nature of expenses -- at a minimum depreciation,
amortisation, and staff costs -- must be disclosed. [IAS 1.93]
Cash Flow Statement
Rather than setting out separate standards for presenting the cash flow statement, IAS

1.102 refers to IAS 7, Cash Flow Statements


Statement of Changes in Equity
IAS 1 requires an entity to present a statement of changes in equity as a separate
component of the financial statements. The statement must show: [IAS 1.96]
* (a) profit or loss for the period;
* (b) each item of income and expense for the period that is recognised directly in equity,
and the total of those items;
* (c) total income and expense for the period (calculated as the sum of (a) and (b)),
showing separately the total amounts attributable to equity holders of the parent and to
minority interest; and
* (d) for each component of equity, the effects of changes in accounting policies and
corrections of errors recognised in accordance with IAS 8.
The following amounts may also be presented on the face of the statement of changes in
equity, or they may be presented in the notes: [IAS 1.97]
* (a) capital transactions with owners;
* (b) the balance of accumulated profits at the beginning and at the end of the period,
and the movements for the period; and
* (c) a reconciliation between the carrying amount of each class of equity capital, share
premium and each reserve at the beginning and at the end of the period, disclosing each
movement.
Notes to the Financial Statements
The notes must: [IAS 1.103]
* present information about the basis of preparation of the financial statements and the
specific accounting policies used;
* disclose any information required by IFRSs that is not presented on the face of the
balance sheet, income statement, statement of changes in equity, or cash flow
statement; and
* provide additional information that is not presented on the face of the balance sheet,
income statement, statement of changes in equity, or cash flow statement that is
deemed relevant to an understanding of any of them.
Notes should be cross-referenced from the face of the financial statements to the
relevant note. [IAS 1.104]
IAS 1.105 suggests that the notes should normally be presented in the following order:
* a statement of compliance with IFRSs;
* a summary of significant accounting policies applied, including: [IAS 1.108]
o the measurement basis (or bases) used in preparing the financial statements; and
o the other accounting policies used that are relevant to an understanding of the financial
statements.
* supporting information for items presented on the face of the balance sheet, income
statement, statement of changes in equity, and cash flow statement, in the order in
which each statement and each line item is presented; and
* other disclosures, including:

o contingent liabilities (see IAS 37) and unrecognised contractual commitments; and
o non-financial disclosures, such as the entity's financial risk management objectives and
policies (see IAS 32).
Disclosure of judgements. New in the 2003 revision to IAS 1, an entity must disclose, in
the summary of significant accounting policies or other notes, the judgements, apart from
those involving estimations, that management has made in the process of applying the
entity's accounting policies that have the most significant effect on the amounts
recognised in the financial statements. [IAS 1.113]
Examples cited in IAS 1.114 include management's judgements in determining:
* whether financial assets are held-to-maturity investments;
* when substantially all the significant risks and rewards of ownership of financial assets
and lease assets are transferred to other entities;
* whether, in substance, particular sales of goods are financing arrangements and
therefore do not give rise to revenue; and
* whether the substance of the relationship between the entity and a special purpose
entity indicates that the special purpose entity is controlled by the entity.
Disclosure of key sources of estimation uncertainty. Also new in the 2003 revision to IAS
1, an entity must disclose, in the notes, information about the key assumptions
concerning the future, and other key sources of estimation uncertainty at the balance
sheet date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year. [IAS 1.116] These
disclosures do not involve disclosing budgets or forecasts.
The following other note disclosures are required by IAS 1.126 if not disclosed elsewhere
in information published with the financial statements:
*
*
*
*
*

domicile of the enterprise;


country of incorporation;
address of registered office or principal place of business;
description of the enterprise's operations and principal activities;
name of its parent and the ultimate parent if it is part of a group.

Disclosures about Dividends


The following must be disclosed either on the face of the income statement or the
statement of changes in equity or in the notes: [IAS 1.95]
* the amount of dividends recognised as distributions to equity holders during the period,
and
* the related amount per share.
The following must be disclosed in the notes: {IAS 1.125]
* the amount of dividends proposed or declared before the financial statements were
authorised for issue but not recognised as a distribution to equity holders during the
period, and the related amount per share; and
* the amount of any cumulative preference dividends not recognised.
August 2005 Amendments re Capital Disclosures

As part of its project to develop IFRS 7 Financial Instruments: Disclosures, the IASB
concluded also to amend IAS 1 to add requirements for disclosures of:
*
*
*
*

the entity's objectives, policies and processes for managing capital;


quantitative data about what the entity regards as capital;
whether the entity has complied with any capital requirements; and
if it has not complied, the consequences of such non-compliance.

These disclosure requirements apply to all entities, effective for annual periods beginning
on or after 1 January 2007, with earlier application encouraged. Illustrative examples are
provided as guidance.
RESOURCES:
http://lessonko.blogspot.com/2007/07/philipine-accounting-standard-1.html
http://www.ifrs.org/IFRSs/Pages/IFRS.aspx
Conceptual Framework for Financial Reporting 2010
History of the Framework
Framework for the Preparation and Presentation of Financial Statements
April 1989
(the Framework) was approved by the IASC Board
July 1989
Framework was published
April 2001
Framework adopted by the IASB.
September 20 Conceptual Framework for Financial Reporting 2010 (the IFRS Framework)
10
approved by the IASB
Related Interpretations
None
Amendments under consideration by the IASB
IASB Project on Conceptual Framework.
Purpose and status of the Framework
The IFRS Framework describes the basic concepts that underlie the preparation and
presentation of financial statements for external users. The IFRS Framework serves as a
guide to the Board in developing future IFRSs and as a guide to resolving accounting
issues that are not addressed directly in an International Accounting Standard or
International Financial Reporting Standard or Interpretation.
In the absence of a Standard or an Interpretation that specifically applies to a transaction,
management must use its judgement in developing and applying an accounting policy
that results in information that is relevant and reliable. In making that judgement, IAS
8.11 requires management to consider the definitions, recognition criteria, and
measurement concepts for assets, liabilities, income, and expenses in the IFRS
Framework. This elevation of the importance of the [IFRS] Framework was added in the
2003 revisions to IAS 8.
The IFRS Framework
Scope
The IFRS Framework addresses:
the objective of financial reporting
the qualitative characteristics of useful financial information
the reporting entity
the definition, recognition and measurement of the elements from which financial
statements are constructed
concepts of capital and capital maintenance
[IFRS Framework, Scope]

Chapter 1: The Objective of general purpose financial reporting


The primary users of general purpose financial reporting are present and potential
investors, lenders and other creditors, who use that information to make decisions about
buying, selling or holding equity or debt instruments and providing or settling loans or
other forms of credit. [F OB2]
The primary users need information about the resources of the entity not only to assess
an entity's prospects for future net cash inflows but also how effectively and efficiently
management has discharged their responsibilities to use the entity's existing resources
(i.e., stewardship). [F OB4]
The IFRS Framework notes that general purpose financial reports cannot provide all the
information that users may need to make economic decisions. They will need to consider
pertinent information from other sources as well. [F OB6]
The IFRS Framework notes that other parties, including prudential and market regulators,
may find general purpose financial reports useful. However, the Board considered that
the objectives of general purpose financial reporting and the objectives of financial
regulation may not be consistent. Hence, regulators are not considered a primary user
and general purpose financial reports are not primarily directed to regulators or other
parties. [F OB10 and F BC1.20-BC 1.23]
Information about a reporting entity's economic resources, claims, and changes in
resources and claims
Economic resources and claims
Information about the nature and amounts of a reporting entity's economic resources and
claims assists users to assess that entity's financial strengths and weaknesses; to assess
liquidity and solvency, and its need and ability to obtain financing. Information about the
claims and payment requirements assists users to predict how future cash flows will be
distributed among those with a claim on the reporting entity. [F OB13]
A reporting entity's economic resources and claims are reported in the statement of
financial position. [See IAS 1.54-80A]
Changes in economic resources and claims
Changes in a reporting entity's economic resources and claims result from that entity's
performance and from other events or transactions such as issuing debt or equity
instruments. Users need to be able to distinguish between both of these changes. [F
OB15]
Financial performance reflected by accrual accounting
Information about a reporting entity's financial performance during a period, representing
changes in economic resources and claims other than those obtained directly from
investors and creditors, is useful in assessing the entity's past and future ability to
generate net cash inflows. Such information may also indicate the extent to which
general economic events have changed the entity's ability to generate future cash
inflows. [F OB18-OB19]
The changes in an entity's economic resources and claims are presented in the statement
of comprehensive income. [See IAS 1.81-105]
Financial performance reflected by past cash flows
Information about a reporting entity's cash flows during the reporting period also assists
users to assess the entity's ability to generate future net cash inflows. This information
indicates how the entity obtains and spends cash, including information about its
borrowing and repayment of debt, cash dividends to shareholders, etc. [F OB20]
The changes in the entity's cash flows are presented in the statement of cash flows. [See
IAS 7]
Changes in economic resources and claims not resulting from financial performance
Information about changes in an entity's economic resources and claims resulting from
events and transactions other than financial performance, such as the issue of equity
instruments or distributions of cash or other assets to shareholders is necessary to

complete the picture of the total change in the entity's economic resources and claims. [F
OB21]
The changes in an entity's economic resources and claims not resulting from financial
performance is presented in the statement of changes in equity. [See IAS 1.106-110]
Chapter 2: The Reporting entity
The chapter on the Reporting Entity will be reconsidered as part of the IASB's
comprehensive project on the framework.
Chapter 3: Qualitative characteristics of useful financial information
The qualitative characteristics of useful financial reporting identify the types of
information are likely to be most useful to users in making decisions about the reporting
entity on the basis of information in its financial report. The qualitative characteristics
apply equally to financial information in general purpose financial reports as well as to
financial information provided in other ways. [F QC1, QC3]
Financial information is useful when it is relevant and represents faithfully what it
purports to represent. The usefulness of financial information is enhanced if it is
comparable, verifiable, timely and understandable. [F QC4]
Fundamental qualitative characteristics
Relevance and faithful representation are the fundamental qualitative characteristics of
useful financial information. [F QC5]
Relevance
Relevant financial information is capable of making a difference in the decisions made by
users. Financial information is capable of making a difference in decisions if it has
predictive value, confirmatory value, or both. The predictive value and confirmatory value
of financial information are interrelated. [F QC6-QC10]
Materiality is an entity-specific aspect of relevance based on the nature or magnitude (or
both) of the items to which the information relates in the context of an individual entity's
financial report. [F QC11]
Faithful representation
General purpose financial reports represent economic phenomena in words and numbers,
To be useful, financial information must not only be relevant, it must also represent
faithfully the phenomena it purports to represent. This fundamental characteristic seeks
to maximise the underlying characteristics of completeness, neutrality and freedom from
error. [F QC12] Information must be both relevant and faithfully represented if it is to be
useful. [F QC17]
Enhancing qualitative characteristics
Comparability, verifiability, timeliness and understandability are qualitative
characteristics that enhance the usefulness of information that is relevant and faithfully
represented. [F QC19]
Comparability
Information about a reporting entity is more useful if it can be compared with a similar
information about other entities and with similar information about the same entity for
another period or another date. Comparability enables users to identify and understand
similarities in, and differences among, items. [F QC20-QC21]
Verifiability
Verifiability helps to assure users that information represents faithfully the economic
phenomena it purports to represent. Verifiability means that different knowledgeable and
independent observers could reach consensus, although not necessarily complete
agreement, that a particular depiction is a faithful representation. [F QC26]
Timeliness
Timeliness means that information is available to decision-makers in time to be capable
of influencing their decisions. [F QC29]
Understandability
Classifying, characterising and presenting information clearly and concisely makes it

understandable. While some phenomena are inherently complex and cannot be made
easy to understand, to exclude such information would make financial reports incomplete
and potentially misleading. Financial reports are prepared for users who have a
reasonable knowledge of business and economic activities and who review and analyse
the information with diligence. [F QC30-QC32]
Applying the enhancing qualitative characteristics
Enhancing qualitative characteristics should be maximised to the extent necessary.
However, enhancing qualitative characteristics (either individually or collectively) render
information useful if that information is irrelevant or not represented faithfully. [F QC33]
The cost constraint on useful financial reporting
Cost is a pervasive constraint on the information that can be provided by general purpose
financial reporting. Reporting such information imposes costs and those costs should be
justified by the benefits of reporting that information. The IASB assesses costs and
benefits in relation to financial reporting generally, and not solely in relation to individual
reporting entities. The IASB will consider whether different sizes of entities and other
factors justify different reporting requirements in certain situations. [F QC35-QC39]
Chapter 4: The Framework: the remaining text
Chapter 4 contains the remaining text of the Framework approved in 1989. As the project
to revise the Framework progresses, relevant paragraphs in Chapter 4 will be deleted and
replaced by new Chapters in the IFRS Framework. Until it is replaced, a paragraph in
Chapter 4 has the same level of authority within IFRSs as those in Chapters 1-3.
Underlying assumption
The IFRS Framework states that the going concern assumption is an underlying
assumption. Thus, the financial statements presume that an entity will continue in
operation indefinitely or, if that presumption is not valid, disclosure and a different basis
of reporting are required. [F 4.1]
The elements of financial statements
Financial statements portray the financial effects of transactions and other events by
grouping them into broad classes according to their economic characteristics. These
broad classes are termed the elements of financial statements.
The elements directly related to financial position (balance sheet) are: [F 4.4]
Assets
Liabilities
Equity
The elements directly related to performance (income statement) are: [F 4.25]
Income
Expenses
The cash flow statement reflects both income statement elements and some changes in
balance sheet elements.
Definitions of the elements relating to financial position
Asset. An asset is a resource controlled by the entity as a result of past events and
from which future economic benefits are expected to flow to the entity. [F 4.4(a)]
Liability. A liability is a present obligation of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity of resources
embodying economic benefits. [F 4.4(b)]
Equity. Equity is the residual interest in the assets of the entity after deducting all
its liabilities. [F 4.4(c)]
Definitions of the elements relating to performance
Income. Income is increases in economic benefits during the accounting period in
the form of inflows or enhancements of assets or decreases of liabilities that result
in increases in equity, other than those relating to contributions from equity
participants. [F 4.25(a)]

Expense. Expenses are decreases in economic benefits during the accounting


period in the form of outflows or depletions of assets or incurrences of liabilities
that result in decreases in equity, other than those relating to distributions to
equity participants. [F 4.25(b)]
The definition of income encompasses both revenue and gains. Revenue arises in the
course of the ordinary activities of an entity and is referred to by a variety of different
names including sales, fees, interest, dividends, royalties and rent. Gains represent other
items that meet the definition of income and may, or may not, arise in the course of the
ordinary activities of an entity. Gains represent increases in economic benefits and as
such are no different in nature from revenue. Hence, they are not regarded as
constituting a separate element in the IFRS Framework. [F 4.29 and F 4.30]
The definition of expenses encompasses losses as well as those expenses that arise in
the course of the ordinary activities of the entity. Expenses that arise in the course of the
ordinary activities of the entity include, for example, cost of sales, wages and
depreciation. They usually take the form of an outflow or depletion of assets such as cash
and cash equivalents, inventory, property, plant and equipment. Losses represent other
items that meet the definition of expenses and may, or may not, arise in the course of
the ordinary activities of the entity. Losses represent decreases in economic benefits and
as such they are no different in nature from other expenses. Hence, they are not
regarded as a separate element in this Framework. [F 4.33 and F 4.34]
Recognition of the elements of financial statements
Recognition is the process of incorporating in the balance sheet or income statement an
item that meets the definition of an element and satisfies the following criteria for
recognition: [F 4.37 and F 4.38]
It is probable that any future economic benefit associated with the item will flow to
or from the entity; and
The item's cost or value can be measured with reliability.
Based on these general criteria:
An asset is recognised in the balance sheet when it is probable that the future
economic benefits will flow to the entity and the asset has a cost or value that can
be measured reliably. [F 4.44]
A liability is recognised in the balance sheet when it is probable that an outflow of
resources embodying economic benefits will result from the settlement of a present
obligation and the amount at which the settlement will take place can be measured
reliably. [F 4.46]
Income is recognised in the income statement when an increase in future economic
benefits related to an increase in an asset or a decrease of a liability has arisen
that can be measured reliably. This means, in effect, that recognition of income
occurs simultaneously with the recognition of increases in assets or decreases in
liabilities (for example, the net increase in assets arising on a sale of goods or
services or the decrease in liabilities arising from the waiver of a debt payable). [F
4.47]
Expenses are recognised when a decrease in future economic benefits related to a
decrease in an asset or an increase of a liability has arisen that can be measured
reliably. This means, in effect, that recognition of expenses occurs simultaneously
with the recognition of an increase in liabilities or a decrease in assets (for
example, the accrual of employee entitlements or the depreciation of equipment).
[F 4.49]
Measurement of the elements of financial statements
Measurement involves assigning monetary amounts at which the elements of the
financial statements are to be recognised and reported. [F 4.54]
The IFRS Framework acknowledges that a variety of measurement bases are used today

to different degrees and in varying combinations in financial statements, including: [F


4.55]
Historical cost
Current cost
Net realisable (settlement) value
Present value (discounted)
Historical cost is the measurement basis most commonly used today, but it is usually
combined with other measurement bases. [F. 4.56] The IFRS Framework does not include
concepts or principles for selecting which measurement basis should be used for
particular elements of financial statements or in particular circumstances. Individual
standards and interpretations do provide this guidance, however.