Conceptual Framework for Financial Reporting

party has no practical ability to act in a manner inconsistent with its
customary practices, published policies or specific statements (see
paragraph 4.31).
Some goods or services—for example, employee services—are received and
immediately consumed. An entity’s right to obtain the economic benefits
produced by such goods or services exists momentarily until the entity
consumes the goods or services.
Not all of an entity’s rights are assets of that entity—to be assets of the entity,
the rights must both have the potential to produce for the entity economic
benefits beyond the economic benefits available to all other parties (see
paragraphs 4.14–4.18) and be controlled by the entity (see paragraphs
4.6
4.7
4.8
4.9
Conceptual Framework
© IFRS Foundation
A39

---

4.19–4.25). For example, rights available to all parties without significant cost
—for instance, rights of access to public goods, such as public rights of way
over land, or know-how that is in the public domain—are typically not assets
for the entities that hold them.
An entity cannot have a right to obtain economic benefits from itself. Hence:
(a)
debt instruments or equity instruments issued by the entity and
repurchased and held by it—for example, treasury shares—are not
economic resources of that entity; and
(b)
if a reporting entity comprises more than one legal entity, debt
instruments or equity instruments issued by one of those legal entities
and held by another of those legal entities are not economic resources
of the reporting entity.
In principle, each of an entity’s rights is a separate asset. However, for
accounting purposes, related rights are often treated as a single unit of
account that is a single asset (see paragraphs 4.48–4.55). For example, legal
ownership of a physical object may give rise to several rights, including:
(a)
the right to use the object;
(b)
the right to sell rights over the object;
(c)
the right to pledge rights over the object; and
(d)
other rights not listed in (a)–(c).
In many cases, the set of rights arising from legal ownership of a physical
object is accounted for as a single asset. Conceptually, the economic resource
is the set of rights, not the physical object. Nevertheless, describing the set of
rights as the physical object will often provide a faithful representation of
those rights in the most concise and understandable way.
In some cases, it is uncertain whether a right exists. For example, an entity
and another party might dispute whether the entity has a right to receive an
economic resource from that other party. Until that existence uncertainty is
resolved—for example, by a court ruling—it is uncertain whether the entity
has a right and, consequently, whether an asset exists. (Paragraph 5.14
discusses recognition of assets whose existence is uncertain.)