Conceptual Framework for Financial Reporting

parties, or by financial distress or other duress of one of the parties;
(b)
an asset may be granted to the entity free of charge by a government
or donated to the entity by another party;
(c)
a liability may be imposed by legislation or regulation; or
(d)
a liability to pay compensation or a penalty may arise from an act of
wrongdoing.
In such cases, measuring the asset acquired, or the liability incurred, at its
historical cost may not provide a faithful representation of the entity’s assets
and liabilities and of any income or expenses arising from the transaction or
other event. Hence, it may be appropriate to measure the asset acquired, or
the liability incurred, at deemed cost, as described in paragraph 6.6. Any
difference between that deemed cost and any consideration given or received
would be recognised as income or expenses at initial recognition.
When assets are acquired, or liabilities incurred, as a result of an event that is
not a transaction on market terms, all relevant aspects of the transaction or
other event need to be identified and considered. For example, it may be
necessary to recognise other assets, other liabilities, contributions from
holders of equity claims or distributions to holders of equity claims to
faithfully represent the substance of the effect of the transaction or other
event on the entity’s financial position (see paragraphs 4.59–4.62) and any
related effect on the entity’s financial performance.
More than one measurement basis
Sometimes, consideration of the factors described in paragraphs 6.43–6.76
may lead to the conclusion that more than one measurement basis is needed
for an asset or liability and for related income and expenses in order to
provide relevant information that faithfully represents both the entity’s
financial position and its financial performance.
In most cases, the most understandable way to provide that information is:
(a)
to use a single measurement basis both for the asset or liability in the
statement of financial position and for related income and expenses in
the statement(s) of financial performance; and
(b)
to provide in the notes additional information applying a different
measurement basis.
However, in some cases, that information is more relevant, or results in a
more faithful representation of both the entity’s financial position and its
financial performance, through the use of:
6.80
6.81
6.82
6.83
6.84
6.85
Conceptual Framework
A80
© IFRS Foundation

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(a)
a current value measurement basis for the asset or liability in the
statement of financial position; and
(b)
a different measurement basis for the related income and expenses in
the statement of profit or loss
10
(see paragraphs 7.17–7.18).
In selecting those measurement bases, it is necessary to consider the factors
discussed in paragraphs 6.43–6.76.
In such cases, the total income or total expenses arising in the period from the
change in the current value of the asset or liability is separated and classified
(see paragraphs 7.14–7.19) so that:
(a)
the statement of profit or loss includes the income or expenses
measured applying the measurement basis selected for that statement;
and
(b)
other comprehensive income includes all the remaining income or
expenses. As a result, the accumulated other comprehensive income
related to that asset or liability equals the difference between:
(i)
the carrying amount of the asset or liability in the statement of
financial position; and
(ii)
the carrying amount that would have been determined
applying the measurement basis selected for the statement of
profit or loss.