Conceptual Framework for Financial Reporting

REPORTING ENTITY
FINANCIAL STATEMENTS
3.1
Objective and scope of financial statements
3.2
Reporting period
3.4
Perspective adopted in financial statements
3.8
Going concern assumption
3.9
THE REPORTING ENTITY
3.10
Consolidated and unconsolidated financial statements
3.15
CHAPTER 4—THE ELEMENTS OF FINANCIAL STATEMENTS
INTRODUCTION
4.1
DEFINITION OF AN ASSET
4.3
Right
4.6
Potential to produce economic benefits
4.14
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Control
4.19
DEFINITION OF A LIABILITY
4.26
Obligation
4.28
Transfer of an economic resource
4.36
Present obligation as a result of past events
4.42
ASSETS AND LIABILITIES
4.48
Unit of account
4.48
Executory contracts
4.56
Substance of contractual rights and contractual obligations
4.59
DEFINITION OF EQUITY
4.63
DEFINITIONS OF INCOME AND EXPENSES
4.68
CHAPTER 5—RECOGNITION AND DERECOGNITION
THE RECOGNITION PROCESS
5.1
RECOGNITION CRITERIA
5.6
Relevance
5.12
Faithful representation
5.18
DERECOGNITION
5.26
CHAPTER 6—MEASUREMENT
INTRODUCTION
6.1
MEASUREMENT BASES
6.4
Historical cost
6.4
Current value
6.10
INFORMATION PROVIDED BY PARTICULAR MEASUREMENT BASES
6.23
Historical cost
6.24
Current value
6.32
FACTORS TO CONSIDER WHEN SELECTING A MEASUREMENT BASIS
6.43
Relevance
6.49
Faithful representation
6.58
Enhancing qualitative characteristics and the cost constraint
6.63
Factors specific to initial measurement
6.77
More than one measurement basis
6.83
MEASUREMENT OF EQUITY
6.87
CASH-FLOW-BASED MEASUREMENT TECHNIQUES
6.91
CHAPTER 7—PRESENTATION AND DISCLOSURE
PRESENTATION AND DISCLOSURE AS COMMUNICATION TOOLS
7.1
PRESENTATION AND DISCLOSURE OBJECTIVES AND PRINCIPLES
7.4
CLASSIFICATION
7.7
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Classification of assets and liabilities
7.9
Classification of equity
7.12
Classification of income and expenses
7.14
AGGREGATION
7.20
CHAPTER 8—CONCEPTS OF CAPITAL AND CAPITAL
MAINTENANCE
CONCEPTS OF CAPITAL
8.1
CONCEPTS OF CAPITAL MAINTENANCE AND THE DETERMINATION OF
PROFIT
8.3
CAPITAL MAINTENANCE ADJUSTMENTS
8.10
APPENDIX—DEFINED TERMS
APPROVAL BY THE BOARD OF THE CONCEPTUAL FRAMEWORK FOR
FINANCIAL REPORTING ISSUED IN MARCH 2018
FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION
BASIS FOR CONCLUSIONS
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STATUS AND PURPOSE OF THE CONCEPTUAL FRAMEWORK
The Conceptual Framework for Financial Reporting (Conceptual Framework) describes
the objective of, and the concepts for, general purpose financial reporting. The
purpose of the Conceptual Framework is to: 
(a)
assist the International Accounting Standards Board (Board) to develop
IFRS Standards (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.
The Conceptual Framework is not a Standard. Nothing in the Conceptual
Framework overrides any Standard or any requirement in a Standard.
To meet the objective of general purpose financial reporting, the Board may
sometimes specify requirements that depart from aspects of the Conceptual
Framework. If the Board does so, it will explain the departure in the Basis for
Conclusions on that Standard.
The Conceptual Framework may be revised from time to time on the basis of the
Board’s experience of working with it. Revisions of the Conceptual
Framework will not automatically lead to changes to the Standards. Any
decision to amend a Standard would require the Board to go through its due
process for adding a project to its agenda and developing an amendment to
that Standard.
The Conceptual Framework contributes to the stated mission of the IFRS
Foundation and of the Board, which is part of the IFRS Foundation. That
mission is to develop Standards that bring transparency, accountability and
efficiency to financial markets around the world. The Board’s work serves the
public interest by fostering trust, growth and long-term financial stability in
the global economy. The Conceptual Framework provides the foundation for
Standards that:
(a)
contribute to transparency by enhancing the international
comparability and quality of financial information, enabling investors
and other market participants to make informed economic decisions.
(b)
strengthen accountability by reducing the information gap between
the providers of capital and the people to whom they have entrusted
their money. Standards based on the Conceptual Framework provide
information needed to hold management to account. As a source of
globally comparable information, those Standards are also of vital
importance to regulators around the world.
(c)
contribute to economic efficiency by helping investors to identify
opportunities and risks across the world, thus improving capital
allocation. For businesses, the use of a single, trusted accounting
language derived from Standards based on the Conceptual Framework
lowers the cost of capital and reduces international reporting costs.
SP1.1
SP1.2
SP1.3
SP1.4
SP1.5
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C
ONTENTS
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