Septiembre 2011

Conceptual framework

Financial statements and disclosure requirements. The financial statements include:

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  Balance sheet
  
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  Income statement
  
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  Statement of changes in equity
  
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  Statement of cash flows
  
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  Notes to the financial statements
  

The statement of cash flows is not mandatory for companies that may prepare an abridged balance sheet, abridged statement of changes in equity and notes to the abridged financial statements.

The information included in the financial statements must be relevant and reliable and meet the requirements of comparability and clarity.

Accounting principles

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  Going concern
  
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  Accrual
  
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  Consistency
  
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  Prudence
  
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  Non-offsetting
  
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  Materiality
  

Conceptual framework
In the event of conflict among accounting principles, the principle that is more conducive to faithful representation must prevail. It should be indicated that the definition of the principle of prudence is not consistent with the definition in the former Spanish National Chart of Accounts of 1990. The current principle requires prudence when making estimates or valuations in conditions of uncertainty, whereas in the former Spanish National Chart of Accounts of 1990 the principle of prudence was a priority.

Elements of financial statements and accounting recognition methods:

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  The basic elements of financial statements are defined as:
  

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  Assets, liabilities and equity. These elements are recognised in the balance sheet.
  

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  Revenue and expenses. These elements are recognised in the income statement or, where appropriate, directly in the statement of changes in equity.
  

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  Items are recognised when -meeting the definition of an element (assets, liabilities, etc.)- it is probable that resources embodying economic benefits will flow to and from the entity and the value thereof can be measured with sufficient reliability.
  

Measurement bases

The Spanish National Chart of Accounts indicates that the following measurement bases and their related definitions must be taken into account:

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  Historical cost or cost.
  
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  Fair value.
  
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  Net realisable value.
  
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  Present value.
  
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  Value in use.
  
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  Costs to sell.
  
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  Amortised cost.
  
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  Transaction costs attributable to a financial asset or liability.
  
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  Carrying amount or book value.
  
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  Residual value.
  

On initial recognition, as a general rule, assets and liabilities are measured as follows: