Conceptual Framework for Financial Reporting

party that has a right to receive that resource, entities sometimes decide to,
for example:
(a)
settle the obligation by negotiating a release from the obligation;
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(b)
transfer the obligation to a third party; or
(c)
replace that obligation to transfer an economic resource with another
obligation by entering into a new transaction.
In the situations described in paragraph 4.40, an entity has the obligation to
transfer an economic resource until it has settled, transferred or replaced that
obligation.
Present obligation as a result of past events
The third criterion for a liability is that the obligation is a present obligation
that exists as a result of past events.
A present obligation exists as a result of past events only if:
(a)
the entity has already obtained economic benefits or taken an action;
and
(b)
as a consequence, the entity will or may have to transfer an economic
resource that it would not otherwise have had to transfer.
The economic benefits obtained could include, for example, goods or services.
The action taken could include, for example, operating a particular business
or operating in a particular market. If economic benefits are obtained, or an
action is taken, over time, the resulting present obligation may accumulate
over that time.
If new legislation is enacted, a present obligation arises only when, as a
consequence of obtaining economic benefits or taking an action to which that
legislation applies, an entity will or may have to transfer an economic
resource that it would not otherwise have had to transfer. The enactment of
legislation is not in itself sufficient to give an entity a present obligation.
Similarly, an entity’s customary practice, published policy or specific
statement of the type mentioned in paragraph 4.31 gives rise to a present
obligation only when, as a consequence of obtaining economic benefits, or
taking an action, to which that practice, policy or statement applies, the entity
will or may have to transfer an economic resource that it would not otherwise
have had to transfer.
A present obligation can exist even if a transfer of economic resources cannot
be enforced until some point in the future. For example, a contractual liability
to pay cash may exist now even if the contract does not require a payment
until a future date. Similarly, a contractual obligation for an entity to perform
work at a future date may exist now even if the counterparty cannot require
the entity to perform the work until that future date.
An entity does not yet have a present obligation to transfer an economic
resource if it has not yet satisfied the criteria in paragraph 4.43, that is, if it
has not yet obtained economic benefits, or taken an action, that would or
could require the entity to transfer an economic resource that it would not
otherwise have had to transfer. For example, if an entity has entered into a
contract to pay an employee a salary in exchange for receiving the employee’s
services, the entity does not have a present obligation to pay the salary until it
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has received the employee’s services. Before then the contract is executory—
the entity has a combined right and obligation to exchange future salary for
future employee services (see paragraphs 4.56–4.58).