Conceptual Framework for Financial Reporting

Measurement of equity
The total carrying amount of equity (total equity) is not measured directly. It
equals the total of the carrying amounts of all recognised assets less the total
of the carrying amounts of all recognised liabilities.
Because general purpose financial statements are not designed to show an
entity’s value, the total carrying amount of equity will not generally equal:
(a)
the aggregate market value of equity claims on the entity;
(b)
the amount that could be raised by selling the entity as a whole on a
going concern basis; or
(c)
the amount that could be raised by selling all of the entity’s assets and
settling all of its liabilities.
Although total equity is not measured directly, it may be appropriate to
measure directly the carrying amount of some individual classes of equity (see
paragraph 4.65) and some components of equity (see paragraph 4.66).
Nevertheless, because total equity is measured as a residual, at least one class
of equity cannot be measured directly. Similarly, at least one component of
equity cannot be measured directly.
6.86
6.87
6.88
6.89
10 The Conceptual Framework does not specify whether the statement(s) of financial performance
comprise(s) a single statement or two statements. The Conceptual Framework uses the term
‘statement of profit or loss’ to refer both to a separate statement and to a separate section within
a single statement of financial performance.
Conceptual Framework
© IFRS Foundation
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The total carrying amount of an individual class of equity or component of
equity is normally positive, but can be negative in some circumstances.
Similarly, total equity is generally positive, but it can be negative, depending
on which assets and liabilities are recognised and on how they are measured.