How IASB's Framework Defines The Elements Of Financial Statements?

IASB's Framework defines the elements of statement of financial position & income statement as:

STATEMENT OF FINANCIAL POSITION:

ASSET:

An asset is a resource controlled by the enterprise as a result of past events from which future economic benefits are expected to flow to the enterprise. ( F 49 (a) )

LIABILITY:

A liability is a present obligation of the enterprise arising from the past events, the settlement of which is expected to result in an outflow from the enterprise' resources. ( F 49 (b) )

EQUITY:

Equity is the residual interest in the assets of the enterprise after deducting all the liabilities. ( F 49 (c) )

INCOME STATEMENT:

INCOME:

Income is increases in economic benefits during an accounting period in the form of inflows or enhancement of assets or decrease of liabilities that result in increases in equity, other than those relating to contributions from equity participants. (F 70)

EXPENSES:

Expenses are decreases in economic benefits during an accounting period in the form of outflow or depletions of assets or incurrences of liabilities that result in decreases in equity , other than those relating to distributions to equity participants. (F 70)

NOTE: here equity participants means ( proprietor, partners and shareholders)

 

Does IAS 1 Permitts offsetting?

IAS 1 does not allow offsetting against assets & liabilities or income & expenses.. unless anothe IFRS required to do so... but i have heard that offsetting b/w income & expenses can also be allowed  if the loss/gain or any expenses arrived due to the transaction is not material.

 

what should be included in the set of financial statements a/c to IAS 1

According to IAS 1 .. the complete set of financial statement must include :

• statement of financial position
• Income statement or comprehensive income statement
• statement of changes in equity
• statement of cash flows
• accounting policies and explanatory notes

IAS 1 & Accountings' Basic Assumptions

A/c to IAS 1 following four basic assumptions must be considered while preparing financial statements:

• Fair presentation
• Accruals
• Consistency
• Going concern

Along with these four assumptions IAS 1 also give importance to:

• prudence
• substance overform
• materiality

Fair Presentation Override

When a manager wishes not to follow any of the accounting principle considering that if he follows the said rule .. the requirement of basic accounting principle " fair presentation" may be effected... The situation is said as the fair presentation override.