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Conceptual Framework
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- 1the conceptual frameworkThe objective of general purpose financial reporting is to provide financial information about the reporting entity, that is useful to existing and potential investors , lenders and other creditors in making decisions about providing resources to the entity.
- 2Measurements of Costs The framework identifies four possible measurement bases for assets*Historical cost -historical cost measurements is simply the value of the asset at the cash amount it was purchased for
*Current - This measurement uses the current replacement cost of the asset
*Realisable Value - the net realisable value is the amount of cash you expect to receive from your assets
*Present Value - All future cash inflows and outflows are discounted back to the present day using a rate of interest - 3Current AssetsAre ones that an entity expects to use within one years time from the reporting date and are held primarily for the purpose of trading
- 4Non Current Assetsare those whose benefits are expected to last more than one year from the reporting date
- 5The IASB Framework defines a liability as :A present obligation of the entity arising from past events , the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits
- 6Current Liabilityis one which the entity expects to pay off within one year from the reporting date
- 7Non current liabilityis one which the entity expects to settle after one year from the reporting
date - 8The IASB Framework defines equity interest as :The residual interest in the assets of the entity after deducting all its liabilities
Examples of Equity recognised in the financial statements include:
*Share Capital
* Share Premium
* Retained Earnings
* Revaluation Surpluses - 9The IASB defines income as:Income is increases in economic benefits during the accounting period in the form of inflows or enhancement of assets other than those relating to contributions from equity participants
- 10Common sources of income recognised in the financial statements* Sales Revenue generated from the sale of a commodity
*Interest received on a bank account
* Dividend earned on entity's investment
* Rentals received on property leased by the entity
* Gain on re-valuations of company assets - 11The IASB defines an asset as :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
- 12Net realisable valueis the selling price less estimated costs of completion and costs to complete the sale
- 13Tangible AssetHeld for use in the production or supply or services , for rental to others , or for administrative purposes
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- Descripción
- flash cards for conceptual framework
- Creado por
- kelly whittingham
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