Conceptual Framework for Financial Reporting 2018

Conceptual Framework for Financial Reporting was issued by the International Accounting Standards Board in September 2010. It was revised in March 2018.

The purpose of the Conceptual Framework is to:

(a) assist in developing Accounting Standards that are based on consistent concepts;

(b) assist preparers to develop consistent accounting policies when no Standard applies to a particular transaction or other event, or when a Standard allows a choice of accounting policy; and

(c) assist all parties to understand and interpret the Standards. SP1.1

The elements of financial statements defined in the Conceptual Framework are:

(a) assets, liabilities and equity, which relate to a reporting entity’s financial position; and

(b) income and expenses, which relate to a reporting entity’s financial performance. 4.1

Definitions

Asset: An asset is a present economic resource controlled by the entity as a result of past events. 4.3

Economic resource: An economic resource is a right that has the potential to produce economic benefits. 4.4