SAC4_3-95.PDF (2024)

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A) TjT* 0.0494 Tc 0.9539 Tw (major responsibility of the Foundation is the development of Statements of) TjT* 0.0434 Tc 4.3258 Tw (Accounting Concepts and Accounting Standards. The Public Sector) TjT* 0.0242 Tc -0.005 Tw (Accounting Standards Board is one of the boards of the Foundation.) Tj0 -22.08 TD 0.0632 Tc 0.4893 Tw (The Australian Accounting Standards Board was established by section 224) Tj0 -10.08 TD -0.0326 Tc 0.2918 Tw (of the ) Tj26.64 0 TD /F2 10.08 Tf0.0041 Tc 0.725 Tw (Australian Securities Commission Act 1989) Tj179.76 0 TD /F0 10.08 Tf0.0814 Tc 0.6578 Tw (. It has responsibility for) Tj-206.4 -10.08 TD 0.0644 Tc 0.6748 Tw (the development of accounting standards for application by companies, and) Tj0 -10.08 TD 0.0438 Tc 0.1936 Tw (for the development of Statements of Accounting Concepts. When issuing a) TjT* 0.0137 Tc 0.1146 Tw (Statement of Accounting Concepts, the Board carries out one of its functions) TjT* 0.0173 Tc 0.0019 Tw (under section 226 of that Act.) 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TjETq 142.08 162.72 67.92 11.04 re h W n BT142.08 164.64 TD-0.034 Tc 0.0532 Tw (ISSN 1035-3631) TjETQ endstreamendobj3 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj4 0 obj<>streamBT289.44 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (3) Tj5.04 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-60 484.32 TD /F1 10.08 Tf0.0049 Tc 0.0042 Tw (INTRODUCTORY NOTE) TjET240.48 647.04 114.72 0.96 re fBT142.08 629.04 TD/F0 10.08 Tf0.0049 Tc 4.9108 Tw (This Introductory Note explains the purpose of this Statement and) Tj0 -10.08 TD 0.0059 Tc 0.3032 Tw (summarises the primary concepts set out therein, to assist those who wish to) TjT* 0.0053 Tc 1.7866 Tw (obtain an overview of those concepts. It is important to note that a full) TjT* 0.0052 Tc 2.0679 Tw (appreciation of the concepts and their implications can be obtained only) TjT* 0.0054 Tc 0.8899 Tw (when the concepts are read in the context of the related commentary. The) TjT* 0.0051 Tc 2.6222 Tw (background to the development of this Statement and the basis for the) TjT* 0.0059 Tc 0.0032 Tw (conclusions reflected therein are outlined in the attachment to the Statement.) Tj0 -30.24 TD /F2 10.08 Tf0.0033 Tc 0.0059 Tw (The Conceptual Framework) TjET142.08 536.64 113.28 0.48 re fBT142.08 518.16 TD/F0 10.08 Tf0.0045 Tc 0.8687 Tw (The Statement forms part of the conceptual framework for general purpose) Tj0 -10.08 TD 0.0052 Tc 4.2279 Tw (financial reporting in the private and public sectors which is being) TjT* 0.0043 Tc 1.5248 Tw (developed by the Australian Accounting Standards Board $AASB$ and by) TjT* 0.0049 Tc 1.4176 Tw (the Public Sector Accounting Standards Board $PSASB$ of the Australian) TjT* 0.005 Tc 0.5561 Tw (Accounting Research Foundation. The framework will comprise a series of) TjT* 0.0058 Tc 0.9393 Tw (Statements of Accounting Concepts which set out the concepts which have) TjT* 0.0051 Tc 1.724 Tw (been adopted by the AASB and PSASB in respect of the nature, subject,) TjT* 0.0043 Tc 2.5009 Tw (purpose and broad content of general purpose financial reporting. The) TjT* 0.0045 Tc 2.2955 Tw (policy of the Boards regarding the nature and purpose of Statements of) TjT* 0.0053 Tc 2.4475 Tw (Accounting Concepts is set out in Policy Statement 5 "The Nature and) TjT* 0.0053 Tc 0.0038 Tw (Purpose of Statements of Accounting Concepts".) 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Tj-28.8 -20.16 TD 0 Tc 0 Tw (4) Tj28.8 0 TD 0.0059 Tc 3.5733 Tw (Consistent with the role of Statements of Accounting Concepts) Tj0 -10.08 TD 0.0052 Tc 3.8706 Tw (enunciated in Policy Statement 5, the primary purpose of this) TjT* 0.0052 Tc 0.8039 Tw (Statement is as a guide to the AASB and PSASB in developing and) TjT* 0.0048 Tc 1.0843 Tw (reviewing Accounting Standards and other authoritative documents.) TjT* 0.0053 Tc 1.3372 Tw (In addition, this Statement may also provide guidance in analysing) TjT* 0.0052 Tc 2.644 Tw (new or emerging issues in the absence of applicable Accounting) TjT* 0.0049 Tc 0 Tw (Standards.) 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Information) TjT* 0.0058 Tc 0.03 Tw (about the entity's assets, liabilities, equity, revenues and expenses $the) TjT* 0.0063 Tc 2.2694 Tw (elements of financial statements$ is relevant to users in assessing) TjT* 0.0067 Tc 0.0024 Tw (these aspects.) Tj-28.8 -30.24 TD /F2 10.08 Tf0.004 Tc 0.0051 Tw (Purpose of this Statement) TjET142.08 312.96 103.68 0.48 re fBT142.08 294.48 TD/F0 10.08 Tf0 Tc 0 Tw (7) Tj28.8 0 TD 0.0064 Tc 2.0727 Tw (This Statement establishes definitions of the elements of financial) Tj0 -10.08 TD 0.0055 Tc 4.5036 Tw (statements and specifies criteria for their recognition that are) TjT* 0.0052 Tc 1.5639 Tw (consistent with the objective of general purpose financial reporting) TjT* 0.0053 Tc 0.5438 Tw (set out in SAC 2. These definitions and recognition criteria are also) TjT* 0.006 Tc 0.8031 Tw (consistent with the qualitative characteristics set out in Statement of) TjT* 0.0054 Tc 0.038 Tw (Accounting Concepts SAC 3 "Qualitative Characteristics of Financial) TjT* 0.0056 Tc 0 Tw (Information".) Tj-28.8 -20.16 TD 0 Tc (8) Tj28.8 0 TD 0.0054 Tc 0.2197 Tw (This Statement does not address in detail the measurement or display) Tj0 -10.08 TD 0.0058 Tc 2.0914 Tw (of the elements of financial statements or concepts of capital and) TjETendstreamendobj19 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj20 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (11) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0057 Tc 2.0762 Tw (profit. These issues will be the subject of separate Statements of) Tj0 -10.08 TD 0.0053 Tc 0.0038 Tw (Accounting Concepts.) 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An item may be) TjT* 0.0056 Tc 0.9395 Tw (recognised as an element either singly or in combination with other) TjT* 0.0049 Tc 3.9162 Tw (items. For example, a particular asset may be recognised by) TjT* 0.005 Tc 0.855 Tw (incorporation in the carrying amount of a class of assets reported in) TjT* 0.0059 Tc 1.9232 Tw (the statement of financial position. In addition, where assets and) TjT* 0.0054 Tc 0.2001 Tw (liabilities have been set off against each other, or where revenues and) TjT* 0.0059 Tc 1.1378 Tw (expenses have been netted off, in the presentation of those items in) TjT* 0.0063 Tc 2.4371 Tw (financial statements, those elements would nonetheless have been) TjT* 0.0055 Tc 2.0303 Tw (recognised. The manner in which recognised elements should be) TjT* 0.0061 Tc 2.883 Tw (presented in financial statements, including the circ*mstances in) TjT* 0.0054 Tc 0.613 Tw (which they may be set off or netted off, are matters of display which) TjT* 0.0057 Tc 0.3635 Tw (are beyond the scope of this Statement. Inclusion of an element only) TjT* 0.0057 Tc 0.0035 Tw (in notes in the financial report does not constitute recognition.) TjETendstreamendobj23 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj24 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (13) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD /F2 10.08 Tf0.0043 Tc 0.0048 Tw (Disclosure where the Recognition Criteria are not met) TjET170.88 647.52 221.52 0.48 re fBT142.08 629.04 TD/F0 10.08 Tf0 Tc 0 Tw (12) Tj28.8 0 TD 0.006 Tc 0.8297 Tw (Elements of financial statements that fail the recognition criteria set) Tj0 -10.08 TD 0.0056 Tc 3.3635 Tw (out in this Statement would warrant disclosure in notes in the) TjT* 0.005 Tc 1.1841 Tw (financial report if they are considered to be relevant to users of the) TjT* 0.005 Tc 4.2641 Tw (financial report in making and evaluating decisions about the) TjT* 0.0051 Tc 0.004 Tw (allocation of scarce resources.) Tj-28.8 -30.24 TD /F2 10.08 Tf0.0038 Tc 0.0053 Tw (FINANCIAL POSITION) Tj0 -20.16 TD /F0 10.08 Tf0 Tc 0 Tw (13) Tj28.8 0 TD 0.0053 Tc 2.7938 Tw (Statement of Accounting Concepts SAC 2 "Objective of Gene) Tj271.92 0 TD 0.0042 Tc 0 Tw (ral) Tj-271.92 -10.08 TD 0.0056 Tc 4.5635 Tw (Purpose Financial Reporting" defines financial position as the) Tj0 -10.08 TD 0.0049 Tc 0.4602 Tw (economic condition of a reporting entity, having regard to its control) TjT* 0.0047 Tc 4.393 Tw (over resources, financial structure, capacity for adaptation and) TjT* 0.0055 Tc 1.7369 Tw (solvency. The primary financial measures of an entity's economic) TjT* 0.0056 Tc 2.6969 Tw (condition are reported in the statement of financial position, the) TjT* 0.0061 Tc 0.003 Tw (elements of which are assets, liabilities and equity.) Tj-28.8 -30.24 TD /F2 10.08 Tf0.0067 Tc 0 Tw (Assets) TjET142.08 445.92 24.96 0.48 re fBT170.88 427.44 TD0.0048 Tc (Definitions) TjET170.88 425.76 44.88 0.48 re fBT142.08 407.28 TD/F0 10.08 Tf0 Tc (14) Tj28.8 0 TD /F1 10.08 Tf0.0048 Tc 0.7244 Tw ("Assets" are future economic benefits controlled by the entity as) Tj0 -10.08 TD 0.0044 Tc 0.0047 Tw (a result of past transactions or other past events; and) Tj0 -20.16 TD 0.0041 Tc 1.1177 Tw ("control of an asset" means the capacity of the entity to benefit) Tj0 -10.08 TD 0.0048 Tc 0.3044 Tw (from the asset in the pursuit of the entity's objectives and to deny) TjT* 0.0043 Tc 0.0048 Tw (or regulate the access of others to that benefit.) Tj0 -30.24 TD /F2 10.08 Tf0.0056 Tc 0.0036 Tw (Essential Characteristics of Assets) TjET170.88 324.96 140.4 0.48 re fBT142.08 306.48 TD/F0 10.08 Tf0 Tc 0 Tw (15) Tj28.8 0 TD 0.0062 Tc 3.5343 Tw (The definition of assets identifies three essential characteristics.) Tj0 -10.08 TD 0.0057 Tc 2.2114 Tw (First, there must be future economic benefits. Second, the entity) TjT* 0.0054 Tc 1.4655 Tw (must have control over the future economic benefits such that it is) TjT* 0.0053 Tc 0.4469 Tw (able to enjoy the benefits and deny or regulate the access of others to) TjT* 0.0056 Tc 0.8436 Tw (the benefits. Third, the transaction or other event giving rise to the) TjT* 0.0051 Tc 0.0041 Tw (entity's control over the future economic benefits must have occurred.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (16) Tj28.8 0 TD 0.006 Tc 0.9871 Tw (The definition of assets identifies the essential features of assets but) Tj0 -10.08 TD 0.0051 Tc 0.984 Tw (does not specify the conditions that would need to be met before an) TjT* 0.0054 Tc 0.9638 Tw (asset qualifies for recognition. Criteria for the recognition of assets) TjT* 0.0039 Tc 0.0052 Tw (are set out in paragraph 38 and discussed in paragraphs 39 to 45.) TjETendstreamendobj25 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj26 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (14) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.32 TD 0 Tc 0 Tw (17) Tj28.8 0 TD 0.0058 Tc 0.7233 Tw (Assets commonly have other characteristics) Tj179.76 0 TD 0.0057 Tc 0.8195 Tw (, such as acquisition at a) Tj-179.76 -10.08 TD 0.0057 Tc 8.3006 Tw (cost to the entity, tangibility, exchangeability, and legal) Tj0 -10.08 TD 0.0057 Tc 1.4734 Tw (enforceability. However, these are not essential characteristics and) TjT* 0.0055 Tc 0.3808 Tw (the absence of any or all of them is not sufficient to preclude an item) TjT* 0.0048 Tc 0.7844 Tw (from qualifying as an asset. Paragraphs 32 to 37 explain why these) TjT* 0.0063 Tc 0.0028 Tw (are not essential asset characteristics.) Tj0 -20.16 TD /F2 10.08 Tf0.0038 Tc 0.0053 Tw (Future economic benefits) TjET170.88 576.96 102.96 0.48 re fBT142.08 558.48 TD/F0 10.08 Tf0 Tc 0 Tw (18) Tj28.8 0 TD 0.0056 Tc 2.8035 Tw ("Future economic benefits" or service potential is the essence of) Tj0 -10.08 TD 0.006 Tc 0.5071 Tw (assets. "Future economic benefits" is synonymous with the notion of) TjT* 0.0058 Tc 0.6434 Tw (service potential, and is used in this Statement as a reference also to) TjT* 0.0053 Tc 1.1558 Tw (service potential. Future economic benefits can be described as the) TjT* 0.0056 Tc 0.0635 Tw (scarce capacity to provide benefits to the entities that use them, and is) TjT* 0.0054 Tc 0.6638 Tw (common to all assets irrespective of their physical or other form. In) TjT* 0.0046 Tc 4.6045 Tw (pursuing their objectives, both profit-seeking and not-for-profit) TjT* 0.0052 Tc 1.2999 Tw (entities provide goods and services that have the capacity to satisfy) TjT* 0.0054 Tc 0.3437 Tw (human wants and needs. Both types of entity create utility and value) TjT* -0.0081 Tc 1.2972 Tw (in essentially the same way \226 by using assets to provide goods and) TjT* 0.0054 Tc 1.2997 Tw (services that their customers or beneficiaries desire or need. Thus,) TjT* 0.0057 Tc 0.0035 Tw (assets provide a means for entities to achieve their objectives.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (19) Tj28.8 0 TD 0.0054 Tc 0.6037 Tw (In profit-seeking entities, whether in the private or public sector, the) Tj0 -10.08 TD 0.0044 Tc 1.1807 Tw (future economic benefits are used to provide goods and services for) TjT* 0.0055 Tc 3.2303 Tw (exchange with the objective of generating net cash inflows; for) TjT* 0.0053 Tc 4.0038 Tw (example, through sale of the asset which embodies the future) TjT* 0.0047 Tc 0.419 Tw (economic benefits, or sale of the outputs produced through use of the) TjT* 0.0056 Tc 0.0471 Tw (asset. The net cash inflows generated by the future economic benefits) TjT* 0.0056 Tc 1.4915 Tw (may include reductions in cash outflows, such as where an entity's) TjT* 0.0045 Tc 0.9989 Tw (research and development efforts produce a technologically superior) TjT* 0.0047 Tc 0.6977 Tw (production process which lowers the costs of production and thereby) TjT* 0.0052 Tc 0.6173 Tw (reduces the entity's cash outflows. However, many expenditures and) TjT* 0.0051 Tc 1.228 Tw (other events which have the effect of reducing future cash outflows) TjT* 0.0047 Tc 0.1244 Tw (do not give rise to future economic benefits, and therefore do not give) TjT* 0.0052 Tc 2.8039 Tw (rise to assets. For example, redundancy payments to employees) TjT* 0.0051 Tc 1.8149 Tw (which would avoid cash outflows in the future in respect of those) TjT* 0.0051 Tc 0.6041 Tw (employees would not entitle the employer to future services from the) TjT* 0.005 Tc 4.8308 Tw (employees and do not give rise to future economic benefits.) TjT* 0.0054 Tc 0.0037 Tw (Accordingly, those payments do not give rise to assets.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (20) Tj28.8 0 TD 0.0053 Tc 0.8918 Tw (In not-for-profit entities, whether in the public or private sector, the) Tj0 -10.08 TD 0.0045 Tc 0.7246 Tw (future economic benefits are also used to provide goods and services) TjT* 0.006 Tc 3.3898 Tw (in accordance with the entities' objectives. However, since the) TjT* 0.0048 Tc 1.6364 Tw (entities do not pursue profit objectives, the provision of goods and) TjT* 0.0063 Tc 2.3428 Tw (services may not result in net cash inflows to the entities as the) TjT* 0.0052 Tc 1.4003 Tw (recipients of the goods and services may not transfer cash or other) TjT* 0.0063 Tc 0.0028 Tw (benefits to the entities in exchange.) TjETendstreamendobj27 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj28 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (15) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.32 TD 0 Tc 0 Tw (21) Tj28.8 0 TD 0.0048 Tc 1.2698 Tw (The fact that not-for-profit entities do not charge, or do not charge) Tj0 -10.08 TD 0.0052 Tc 0.5079 Tw (fully, their beneficiaries or customers for the goods and services they) TjT* 0.0043 Tc 0.5848 Tw (provide does not deprive those outputs of utility or value; nor does it) TjT* 0.0051 Tc 0.844 Tw (preclude the entities from benefiting from the assets used to provide) TjT* 0.0056 Tc 2.0435 Tw (the goods and services. For example, assets such as monuments,) TjT* 0.0048 Tc 3.81 Tw (museums, cathedrals and historical treasures provide needed or) TjT* 0.0054 Tc 0.5274 Tw (desired services to beneficiaries, typically at little or no direct cost to) TjT* 0.0063 Tc 0.8908 Tw (the beneficiaries. These assets benefit the entities by enabling them) TjT* 0.0052 Tc 0.0039 Tw (to meet their objectives of providing needed services to beneficiaries.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (22) Tj28.8 0 TD 0.0054 Tc 0.5351 Tw (Cash on hand and on deposit is of benefit to an entity because of the) Tj0 -10.08 TD 0.005 Tc 1.8761 Tw (command over future economic benefits it provides. Cash can be) TjT* 0.0051 Tc 2.572 Tw (readily exchanged for goods and services. Some assets, such as) TjT* 0.0057 Tc 0.6994 Tw (debtors and investments, are direct claims to cash inflows which are) TjT* 0.0053 Tc 0.2972 Tw (expected to occur when customers pay their accounts, when investees) TjT* 0.0052 Tc 1.4003 Tw (pay interest or dividends, or when an investment is repaid or sold.) TjT* 0.0049 Tc 1.4922 Tw (Payments made to external parties for services to be received from) TjT* 0.0059 Tc 2.5953 Tw (them in the future, that is, prepayments, are assets because they) TjT* 0.0053 Tc 2.0572 Tw (represent existing rights to receive services. Other assets provide) TjT* 0.0055 Tc 0.7836 Tw (benefits to the entity by being exchanged for cash, claims to cash or) TjT* 0.0048 Tc 0.1376 Tw (other goods and services $for example, inventories of finished goods$;) TjT* 0.004 Tc 1.6196 Tw (by being used to provide goods or services $for example, land and) TjT* 0.0047 Tc 1.9484 Tw (buildings, plant and equipment, and patents$; or by being used to) TjT* 0.0069 Tc 0.0023 Tw (settle liabilities.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (23) Tj28.8 0 TD 0.0051 Tc 0.8307 Tw (The future economic benefits can be distinguished from their source) Tj0 -10.08 TD -0.0067 Tc 0.0712 Tw (\226 a particular object or right. The definition refers to the benefits and) TjT* 0.0057 Tc 0.7671 Tw (not to their source since, in the absence of future economic benefits,) TjT* 0.0053 Tc 1.3146 Tw (the object or right will not be of benefit to the entity and therefore) TjT* 0.0061 Tc 1.0184 Tw (will not qualify as an asset. This means that the assumption that a) TjT* 0.0051 Tc 2.864 Tw (particular type of object or right will always be an asset is not) TjT* 0.0052 Tc 4.6173 Tw (justified. For example, while a machine would normally be) TjT* 0.0056 Tc 0.3036 Tw (associated with future economic benefits, there may be circ*mstances) TjT* 0.0052 Tc 0.3239 Tw (where it would not qualify as an asset because it has become obsolete) TjT* 0.0047 Tc 1.5971 Tw (or unusable and has no scrap value. Further, the future economic) TjT* 0.005 Tc 1.9722 Tw (benefits expected from objects or rights may, by virtue of specific) TjT* 0.0054 Tc 2.7397 Tw (business arrangements, be shared by more than one entity. For) TjT* 0.0055 Tc 0.2036 Tw (example, each party to a joint venture may have an interest, as tenant) TjT* 0.0058 Tc 1.4433 Tw (in common, in each of the objects or rights committed to the joint) TjT* 0.0055 Tc 0.6703 Tw (venture and may possess assets comprising their respective shares of) TjT* 0.0053 Tc 2.0438 Tw (the objects or rights. Also, lease agreements unbundle the future) TjT* 0.0051 Tc 1.3107 Tw (economic benefits embodied in leased property by giving the lessee) TjT* 0.005 Tc 1.998 Tw (the right to hold and use the property and the lessor the right to) TjT* 0.0049 Tc 0.0042 Tw (receive rentals and any residual value.) TjETendstreamendobj29 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj30 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (16) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD /F2 10.08 Tf0.0042 Tc 0.0049 Tw (Control by a particular entity) TjET170.88 647.52 120.24 0.48 re fBT142.08 629.04 TD/F0 10.08 Tf0 Tc 0 Tw (24) Tj28.8 0 TD 0.0061 Tc 2.9897 Tw (The second essential characteristic of an asset is control, which) Tj0 -10.08 TD 0.0059 Tc 1.4248 Tw (relates to the capacity of the entity to benefit from the asset in the) TjT* 0.005 Tc 0.1888 Tw (pursuit of its objectives and to deny or regulate the access of others to) TjT* 0.0062 Tc 2.2429 Tw (that benefit. The entity controlling an asset is the one that can,) TjT* 0.0051 Tc 1.224 Tw (depending on the nature of the asset, exchange it, use it to provide) TjT* 0.0051 Tc 1.3069 Tw (goods or services, exact a price for others' use of it, use it to settle) TjT* 0.0057 Tc 1.9034 Tw (liabilities, hold it, or perhaps distribute it to owners. An asset is) TjT* 0.0062 Tc 0.7229 Tw (specific to an entity in that it cannot at the same time be an asset of) TjT* 0.0061 Tc 3.0697 Tw (another entity, except in those circ*mstances where the asset is) TjT* 0.0049 Tc 2.0202 Tw (controlled indirectly through the entity by virtue of control of the) TjT* 0.0059 Tc 0.985 Tw (entity by another entity. In these circ*mstances, the asset would be) TjT* 0.0054 Tc 1.0837 Tw (recognised in the financial report of the entity that directly controls) TjT* 0.0058 Tc 4.7313 Tw (the asset and in the financial report of the economic entity) TjT* 0.0054 Tc 0.0037 Tw (comprising the controlled and parent entities.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (25) Tj28.8 0 TD 0.0049 Tc 2.4042 Tw (The capacity of an entity to control the future eco) Tj221.04 0 TD 0.0062 Tc 2.6429 Tw (nomic benefits) Tj-221.04 -10.08 TD 0.0049 Tc 0.4188 Tw (would normally stem from legal rights and may be evidenced by title) Tj0 -10.08 TD 0.0056 Tc 2.4036 Tw (deeds, possession, or other sanctions and devices that protect the) TjT* 0.0056 Tc 1.749 Tw (entity's interests. However, legal enforceability of a right is not a) TjT* 0.0051 Tc 0.724 Tw (prerequisite to the establishment of control over the future economic) TjT* 0.0055 Tc 1.1381 Tw (benefits, since an entity may be able to control the future economic) TjT* 0.0049 Tc 1.2042 Tw (benefits expected to flow from a particular item or activity in some) TjT* 0.0046 Tc 0.0045 Tw (other way. Legal enforceability is discussed further in paragraph 37.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (26) Tj28.8 0 TD 0.0071 Tc (Posses) Tj26.16 0 TD 0.0046 Tc 2.3325 Tw (sion or ownership of an object or right would normally be) Tj-26.16 -10.08 TD 0.005 Tc 0.2741 Tw (synonymous with control over the future economic benefits embodied) Tj0 -10.08 TD 0.0059 Tc 3.6469 Tw (in the object or right. However, these are not essential asset) TjT* 0.0056 Tc 2.1853 Tw (characteristics. An entity may possess an object or right but not) TjT* 0.0052 Tc 1.1639 Tw (expect to enjoy the benefits embodied in it. For example, an agent) TjT* 0.0049 Tc 1.7843 Tw (may hold goods for sale on behalf of a principal. Conversely, an) TjT* 0.0054 Tc 2.4838 Tw (entity may not possess an object or right but expect to enjoy its) TjT* 0.0054 Tc 0.816 Tw (benefits. Also, an entity may control an object or right but not own) TjT* 0.005 Tc 1.7059 Tw (it. For example, under a lease agreement, control over the leased) TjT* 0.0051 Tc 0.2222 Tw (property owned by the lessor is transferred to the lessee $although the) TjT* 0.0048 Tc 0.4243 Tw (extent and duration of control will vary according to the terms of the) TjT* 0.0052 Tc 0.1039 Tw (agreement$. Conversely, an entity may own an object or right but not) TjT* 0.0057 Tc 0.0034 Tw (control it.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (27) Tj28.8 0 TD 0.0054 Tc 1.4197 Tw (Some future economic benefits will not be controlled by the entity,) Tj0 -10.08 TD 0.0055 Tc 0.3963 Tw (because the entity cannot deny or regulate the access of other entities) TjT* 0.0055 Tc 2.0327 Tw (to the objects or rights in which the future economic benefits are) TjT* 0.0046 Tc 0.7845 Tw (embodied. For example, public highways represent future economic) TjT* 0.006 Tc 0.9231 Tw (benefits to the entities that use them, but cannot qualify as assets of) TjT* 0.006 Tc 4.6698 Tw (entities other than the entity or entities responsible for their) TjT* 0.0058 Tc 2.0978 Tw (operation. This is because the entities that use the highways are) TjETendstreamendobj31 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj32 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (17) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0056 Tc 0.4617 Tw (unable to control access to them by other entities. Similarly, general) Tj0 -10.08 TD 0.0056 Tc 0.1578 Tw (access to air or water does not qualify as assets of the entities that use) TjT* 0.006 Tc 2.9704 Tw (them, even if the entities have incurred costs to help clean the) TjT* 0.006 Tc 0 Tw (environment.) Tj-28.8 -20.16 TD 0 Tc (28) Tj28.8 0 TD 0.0048 Tc 0.0043 Tw (The ) Tj19.44 0 TD 0.0049 Tc 1.1562 Tw (concept of control permits weight to be given to economic and) Tj-19.44 -10.08 TD 0.0058 Tc 0.6753 Tw (social sanctions where they are effective in inducing entities to fulfil) Tj0 -10.08 TD 0.005 Tc 2.2175 Tw (promises or to comply with widely accepted business practices or) TjT* 0.006 Tc 0.8031 Tw (customs. Thus, inclusion in the definition of assets of a control test) TjT* 0.006 Tc 0.3085 Tw (rather than a legal enforceability test means that the definition is less) TjT* 0.0053 Tc 0.1038 Tw (rigid and more reliable in assessing the capacity of an entity to secure) TjT* 0.0056 Tc 0.0036 Tw (the future economic benefits.) Tj0 -20.16 TD /F2 10.08 Tf0.0041 Tc 0.005 Tw (Occurrence of past transaction or other past event) TjET170.88 516.48 205.44 0.48 re fBT142.08 498 TD/F0 10.08 Tf0 Tc 0 Tw (29) Tj28.8 0 TD 0.0043 Tc (Th) Tj11.52 0 TD 0.006 Tc 0.374 Tw (e third essential characteristic of an asset is that the transaction or) Tj-11.52 -10.08 TD 0.0052 Tc 0.0279 Tw (other event giving the entity control over the future economic benefits) Tj0 -10.08 TD 0.0054 Tc 0.1838 Tw (must have occurred. Most assets are obtained by an entity from cash,) TjT* 0.0052 Tc 2.644 Tw (credit or barter transactions. The transactions may be exchange) TjT* 0.0051 Tc 2.344 Tw (transactions whereby assets are acquired in exchange for existing) TjT* 0.0054 Tc 0.4837 Tw (assets of the entity, or by undertaking an obligation to transfer assets) TjT* 0.0054 Tc 1.0971 Tw (in the future. Alternatively, the transactions may be non-reciprocal) TjT* 0.0049 Tc 6.2842 Tw (transfers, for example, donations, grants, appropriations and) TjT* 0.0053 Tc 1.6358 Tw (contributions by owners or members. Assets may also result from) TjT* 0.0053 Tc 0.0038 Tw (events such as accretion and discovery.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (30) Tj28.8 0 TD 0.0054 Tc 6.2737 Tw (Specification of a temporal characteristic has the effect of) Tj0 -10.08 TD 0.0054 Tc 1.5337 Tw (distinguishing between the future economic benefits of present and) TjT* 0.0056 Tc 2.1199 Tw (future assets of the entity. Future economic benefits that are not) TjT* 0.0053 Tc 0.7238 Tw (controlled at the present time would not qualify as assets. Thus, for) TjT* 0.0046 Tc 2.4646 Tw (the entity to decide prior to the reporting date to acquire a new) TjT* 0.0054 Tc 0.0237 Tw (productive facility does not of itself create an asset for the entity, even) TjT* 0.0052 Tc 0.0839 Tw (though there may be a high probability that the entity will acquire the) TjT* 0.0054 Tc 0.0037 Tw (facility and enjoy the future economic benefits embodied therein.) Tj0 -30.24 TD /F2 10.08 Tf0.0056 Tc 0.0035 Tw (Other Characteristics of Assets) TjET170.88 284.64 126.72 0.48 re fBT142.08 266.16 TD/F0 10.08 Tf0 Tc 0 Tw (31) Tj28.8 0 TD 0.0053 Tc 0.8038 Tw (In paragraph 17 of this Statement, asset characteristics additional to) Tj0 -10.08 TD 0.0045 Tc 1.0126 Tw (those discussed above were identified. Paragraphs 32 to 37 explain) TjT* 0.0059 Tc 8.0261 Tw (why these characteristics are indicative but not essential) TjT* 0.0062 Tc 0.003 Tw (characteristics of an asset.) Tj0 -20.16 TD /F2 10.08 Tf0.0039 Tc 0.0052 Tw (Acquisition at a cost) TjET170.88 214.08 83.28 0.48 re fBT142.08 195.6 TD/F0 10.08 Tf0 Tc 0 Tw (32) Tj28.8 0 TD 0.0051 Tc 0.1641 Tw (Assets are normally acqu) Tj102.24 0 TD 0.0053 Tc 0.2439 Tw (ired at a cost incurred by the entity, whether) Tj-102.24 -10.08 TD 0.0048 Tc 1.3243 Tw (directly in an exchange transaction or indirectly in a production or) TjETendstreamendobj33 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj34 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (18) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0051 Tc 0.004 Tw (distribution activity which transforms or uses up other assets acquired) Tj0 -10.08 TD 0.0058 Tc 0.1695 Tw (at a cost. However, cost incurrence is not intrinsic to the existence of) TjT* 0.0055 Tc 1.8436 Tw (an asset. While the incurrence of costs by an entity may provide) TjT* 0.0055 Tc 1.1818 Tw (evidence of the existence of future economic benefits, it will not be) TjT* 0.0048 Tc 0.191 Tw (conclusive proof since costs may be incurred without obtaining future) TjT* 0.0052 Tc 0.6803 Tw (economic benefits. Equally, as is noted in paragraph 29, assets may) TjT* 0.0051 Tc 0.004 Tw (be obtained without a cost.) Tj0 -20.16 TD /F2 10.08 Tf0.0042 Tc 0 Tw (Tangibility) TjET170.88 566.88 44.4 0.48 re fBT142.08 548.4 TD/F0 10.08 Tf0 Tc (33) Tj28.8 0 TD 0.0058 Tc 2.5633 Tw (Tangibility is not an essential asset characteristic. For example,) Tj0 -10.08 TD 0.005 Tc 1.6841 Tw (receivables, prepayments, patents, trademarks and goodwill can all) TjT* 0.0049 Tc 2.8042 Tw (embody future economic benefits, even though they do not have) TjT* 0.0058 Tc 2.9862 Tw (physical substance. Furthermore, objects which possess physical) TjT* 0.0062 Tc 3.5156 Tw (form will not necessarily meet the definition of assets. As is) TjT* 0.0046 Tc 2.4525 Tw (explained in paragraph 23, it is the presence of future economic) TjT* 0.0055 Tc 0.9636 Tw (benefits, not the physical or other form of an object or right, that is) TjT* 0.0064 Tc 0.0027 Tw (relevant in assessing whether an asset exists.) Tj0 -20.16 TD /F2 10.08 Tf0.003 Tc 0 Tw (Exchangeability) TjET170.88 456 66 0.48 re fBT142.08 437.52 TD/F0 10.08 Tf0 Tc (34) Tj28.8 0 TD 0.0055 Tc 0.7476 Tw (Exchangeability means that an item is separable from the entity and) Tj0 -10.08 TD 0.005 Tc 0.0041 Tw (has a separate disposal value.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (35) Tj28.8 0 TD 0.0055 Tc 0.3936 Tw (Exchangeability is not an essential asset characteristic because future) Tj0 -10.08 TD 0.0053 Tc 0.5057 Tw (economic benefits are not precluded by the inability to sever an asset) TjT* 0.0056 Tc 0.7435 Tw (from the entity, nor are they necessarily related to the existence of a) TjT* 0.0048 Tc 0.2443 Tw (present disposal value. For example, work in process and specialised) TjT* 0.0047 Tc 0.3644 Tw (plant and equipment may have zero or negligible disposal values, yet) TjT* 0.0038 Tc 2.078 Tw (as part of a productive process they could be expected to provide) TjT* 0.0059 Tc 1.4966 Tw (substantial future economic benefits to the entity. Similarly, while) TjT* 0.006 Tc 1.8271 Tw (goodwill is not severable from the entity, it nonetheless meets the) TjT* 0.0058 Tc 0.6513 Tw (definition of an asset since it comprises the future economic benefits) TjT* 0.0058 Tc 0.1233 Tw (embodied in unidentifiable assets. These unidentifiable assets $which) TjT* 0.0065 Tc 1.4426 Tw (are those items which possess the essential characteristics of assets) TjT* 0.0044 Tc 1.7914 Tw (but are not capable of being individually identified$ would usually) TjT* 0.0046 Tc 5.5645 Tw (include market penetration, effective advertising, good labour) TjT* 0.0049 Tc 0.0042 Tw (relations, superior management and a highly skilled workforce.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (36) Tj28.8 0 TD 0.0059 Tc 0.8432 Tw (Although exchangeability is not an essential asset characteristic, the) Tj0 -10.08 TD 0.0048 Tc 1.7563 Tw (existence of a separate disposal value will provide evidence of the) TjT* 0.0055 Tc 0.0037 Tw (existence of future economic benefits.) Tj0 -20.16 TD /F2 10.08 Tf0.0041 Tc 0.005 Tw (Legal enforceability) TjET170.88 214.08 82.08 0.48 re fBT142.08 195.6 TD/F0 10.08 Tf0 Tc 0 Tw (37) Tj28.8 0 TD 0.0052 Tc 3.0439 Tw (Control over future economic benefits has been identified as an) Tj0 -10.08 TD 0.0063 Tc 3.4589 Tw (essential asset characteristic. While the ability of an entity to) TjETendstreamendobj35 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj36 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (19) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0055 Tc 4.3236 Tw (exercise control will often stem from the existence of legally) Tj0 -10.08 TD 0.005 Tc 0.8574 Tw (enforceable rights, the absence of legal ownership does not preclude) TjT* 0.0054 Tc 2.2292 Tw (the existence of control. For example, an entity may protect the) TjT* 0.005 Tc 0.9161 Tw (future economic benefits embodied in a formula or an invention not) TjT* 0.0054 Tc 2.3077 Tw (by obtaining a patent but by maintaining secrecy. Similarly, the) TjT* 0.0048 Tc 1.8043 Tw (presence of legal rights does not guarantee control. For example,) TjT* 0.0049 Tc 4.5162 Tw (goods may be sold subject to reservation of title, whereby a) TjT* 0.0053 Tc 1.3038 Tw (stipulation is placed in a sale of goods agreement to the effect that) TjT* 0.0051 Tc 1.1302 Tw (ownership of the goods does not pass to the buyer until the time of) TjT* 0.0056 Tc 2.3796 Tw (payment. The substance of these arrangements is that the buyer) TjT* 0.0051 Tc 0.4573 Tw (effectively has control over the future economic benefits embodied in) TjT* 0.0053 Tc 0.8238 Tw (the delivered goods unless there is an incapacity to pay. The seller,) TjT* 0.0055 Tc 4.2969 Tw (while possessing legal title and therefore the right to resume) TjT* 0.0055 Tc 1.6618 Tw (possession in the event of the buyer's default, does not control the) TjT* 0.005 Tc 0.2441 Tw (future economic benefits embodied in the goods. Another example is) TjT* 0.0052 Tc 1.1506 Tw (where a government entity, such as a government department, does) TjT* 0.0054 Tc 0.8328 Tw (not have legal ownership of the buildings in which it operates, such) TjT* 0.0055 Tc 2.5836 Tw (ownership vesting in another government entity, but controls the) TjT* 0.005 Tc 1.7907 Tw (future economic benefits embodied in the buildings because of the) TjT* 0.0049 Tc 3.0942 Tw (terms of a particular government policy, ministerial directive or) TjT* 0.0054 Tc 0.0037 Tw (administrative arrangement.) Tj0 -30.24 TD /F2 10.08 Tf0.0048 Tc 0.0043 Tw (Criteria for Recognition of Assets) TjET170.88 415.68 137.04 0.48 re fBT142.08 397.2 TD/F0 10.08 Tf0 Tc 0 Tw (38) Tj28.8 0 TD /F1 10.08 Tf0.0049 Tc 3.6309 Tw (An asset should be recognised in the statement of financial) Tj0 -10.08 TD 0.0047 Tc 0.0044 Tw (position when and only when:) Tj0 -20.16 TD 0.0022 Tc 0 Tw ($a$) Tj28.8 0 TD 0.0049 Tc 1.2043 Tw (it is probable that the future economic benefits embodi) Tj244.08 0 TD 0.005 Tc 0 Tw (ed) Tj-244.08 -10.08 TD 0.0047 Tc 0.0044 Tw (in the asset will eventuate; and) Tj-28.8 -20.16 TD 0.0043 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0047 Tc 3.6284 Tw (the asset possesses a cost or other value that can be) Tj0 -10.08 TD 0.005 Tc 0.0041 Tw (measured reliably.) Tj-28.8 -20.16 TD /F2 10.08 Tf0.0037 Tc 0.0054 Tw (Probable future economic benefits) TjET170.88 304.8 139.92 0.48 re fBT142.08 286.32 TD/F0 10.08 Tf0 Tc 0 Tw (39) Tj28.8 0 TD 0.0056 Tc 0.2916 Tw (In paragraph 15 of this Statement, one of the essential characteristics) Tj0 -10.08 TD 0.0053 Tc 0.702 Tw (of an asset was identified as future economic benefits. However, for) TjT* 0.0048 Tc 0.6043 Tw (an asset to qualify for recognition it must be probable that the future) TjT* 0.0059 Tc 0.0033 Tw (economic benefits will eventuate.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (40) Tj28.8 0 TD 0.0053 Tc 1.3958 Tw (The term "probable" means that the chance of the future economic) Tj0 -10.08 TD 0.0058 Tc 1.5233 Tw (benefits arising is more likely rather than less likely. The term is) TjT* 0.0059 Tc 2.4469 Tw (used in this Statement with its usual meaning and refers to that) TjT* 0.0051 Tc 0.0041 Tw (which can be expected on the basis of available evidence or logic.) TjETendstreamendobj37 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj38 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (20) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.32 TD 0 Tc 0 Tw (41) Tj28.8 0 TD 0.0055 Tc 4.0036 Tw (Assessments of the degree of certainty attaching to the future) Tj0 -10.08 TD 0.0053 Tc 0.2002 Tw (economic benefits in any particular situation are made on the basis of) TjT* 0.0052 Tc 0.3773 Tw (available evidence. An amount receivable, due for settlement shortly) TjT* 0.0045 Tc 1.1846 Tw (after the reporting date and owed by a reputable entity, may not be) TjT* 0.0046 Tc 2.5911 Tw (received if, for example, the debtor suddenly suffers from severe) TjT* 0.0055 Tc 2.9903 Tw (financial problems after the reporting date. Nonetheless, at the) TjT* 0.005 Tc 1.3481 Tw (reporting date, the likelihood of non-receipt is remote and thus the) TjT* 0.0053 Tc 0.0038 Tw (debt would satisfy the criteria for recognition as an asset.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (42) Tj28.8 0 TD 0.005 Tc 3.6282 Tw (Where an expenditure has been made but it is not considered) Tj0 -10.08 TD 0.0055 Tc 0.8764 Tw (probable, at that time, that future economic benefits will flow to the) TjT* 0.0052 Tc 2.1857 Tw (entity, an asset would not qualify for recognition. This does not) TjT* 0.0056 Tc 1.7735 Tw (imply that management's intention in making the expenditure was) TjT* 0.0053 Tc 0.0911 Tw (other than to generate future economic benefits or that, in making the) TjT* 0.0056 Tc 2.3007 Tw (expenditure with this intention, management was misguided; nor,) TjT* 0.0059 Tc 0.4463 Tw (indeed, does it imply that the item fails to satisfy the definition of an) TjT* 0.006 Tc 2.1231 Tw (asset. The only implication is that, on the basis of the available) TjT* 0.0056 Tc 0.6581 Tw (evidence, the necessary degree of certainty for the item to satisfy the) TjT* 0.0052 Tc 1.0948 Tw (criteria for recognition as an asset does not exist. Future economic) TjT* 0.005 Tc 1.9927 Tw (benefits arising from some research and development expenditure,) TjT* 0.0051 Tc 0.504 Tw (for example, may not qualify for recognition as an asset because it is) TjT* 0.0057 Tc 2.0634 Tw (not possible, at the date of the expenditure, to establish that it is) TjT* 0.0051 Tc 0.004 Tw (probable that future economic benefits will eventuate.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (43) Tj28.8 0 TD 0.0056 Tc 0.1512 Tw (An asset which, at a particular point in time, fails the test of probable) Tj0 -10.08 TD 0.0053 Tc 1.2039 Tw (future economic benefits may nonetheless qualify for recognition as) TjT* 0.0053 Tc 0.5023 Tw (an asset at a later date as a result of subsequent transactions or other) TjT* 0.0049 Tc 2.4842 Tw (subsequent events. The asset would qualify for recognition even) TjT* 0.005 Tc 0.0575 Tw (though this may involve amounts that had previously been recognised) TjT* 0.0056 Tc 3.909 Tw (as expenses by the entity. For example, an entity may have) TjT* 0.0049 Tc 1.6308 Tw (recognised as expenses exploration costs in relation to a particular) TjT* 0.0053 Tc 3.4972 Tw (area of interest, and subsequently confirmed the existence of a) TjT* 0.0049 Tc 0.0042 Tw (valuable mineral deposit.) Tj0 -20.16 TD /F2 10.08 Tf0.0039 Tc 0.0053 Tw (Reliable measurement) TjET170.88 304.8 90.24 0.48 re fBT142.08 286.32 TD/F0 10.08 Tf0 Tc 0 Tw (44) Tj28.8 0 TD 0.0059 Tc 1.2232 Tw (For an asset to satisfy the recognition criteria it is necessary that it) Tj0 -10.08 TD 0.0052 Tc 1.324 Tw (possesses a cost or other value that can be measured reliably. The) TjT* 0.0057 Tc 2.7768 Tw (term "reliably" is used in this Statement with the corresponding) TjT* 0.0057 Tc 2.1874 Tw (meaning to that ascribed to the term "reliability" in Statement of) TjT* 0.0054 Tc 0.038 Tw (Accounting Concepts SAC 3 "Qualitative Characteristics of Financial) TjT* 0.0056 Tc 0 Tw (Information".) Tj-28.8 -20.16 TD 0 Tc (45) Tj28.8 0 TD 0.0048 Tc 0.2443 Tw (The appropriate measurement basis for an asset will depend upon the) Tj0 -10.08 TD 0.0054 Tc 0.4437 Tw (model of accounting being applied. In most cases, assets will have a) TjT* 0.0049 Tc 0.7242 Tw (cost or other value that can be measured reliably in accordance with) TjT* 0.0053 Tc 1.6598 Tw (the particular accounting model. However, in some cases an item) TjETendstreamendobj39 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj40 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (21) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0051 Tc 0.824 Tw (may not possess a cost or other value that can be measured reliably.) Tj0 -10.08 TD 0.0055 Tc 0.5436 Tw (In those cases, the item would not qualify for recognition as an asset) TjT* 0.0049 Tc 0.4042 Tw (under any of the models. For example, a mining company may have) TjT* 0.0055 Tc 2.2836 Tw (discovered, at immaterial cost, evidence of minerals at one of its) TjT* 0.0051 Tc 0.9271 Tw (exploration sites, but not be in a position as at the reporting date to) TjT* 0.0053 Tc 0.0038 Tw (know the extent of the find or its value.) Tj0 -20.16 TD /F2 10.08 Tf0.0044 Tc 0.0047 Tw (Disclosure where the recognition criteria are not met) TjET170.88 576.96 216.96 0.48 re fBT142.08 558.48 TD/F0 10.08 Tf0 Tc 0 Tw (46) Tj28.8 0 TD 0.0051 Tc 1.132 Tw (Assets that are not recognised because it is not considered probable) Tj0 -10.08 TD 0.0055 Tc 2.2116 Tw (that future economic benefits will flow to the entity may warrant) TjT* 0.0052 Tc 1.0839 Tw (disclosure in the notes in the financial report because knowledge of) TjT* 0.0058 Tc 1.5834 Tw (the assets is considered to be relevant to the users of the financial) TjT* 0.0048 Tc 2.1643 Tw (report in making and evaluating decisions about the allocation of) TjT* 0.0045 Tc 2.0146 Tw (scarce resources. For example, expenditure on computer software) TjT* 0.0055 Tc 0.6036 Tw (development may meet the definition of an asset and the recognition) TjT* 0.0049 Tc 4.3776 Tw (criterion of reliable measurement, but may fail to qualify for) TjT* 0.0055 Tc 0.1476 Tw (recognition as an asset because, in the particular circ*mstances of the) TjT* 0.0056 Tc 4.3501 Tw (entity, it does not satisfy the recognition criterion relating to) TjT* 0.0046 Tc 2.9145 Tw (probability of occurrence of future economic benefits. However,) TjT* 0.0051 Tc 1.1603 Tw (information about the asset may be considered to be relevant to the) TjT* 0.005 Tc 0.0282 Tw (users of the financial report in making and evaluating decisions about) TjT* 0.0049 Tc 3.2143 Tw (the allocation of scarce resources, and accordingly may warrant) TjT* 0.0058 Tc 0.0033 Tw (disclosure in the notes in the financial report.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (47) Tj28.8 0 TD 0.0055 Tc 0.2036 Tw (Assets that are not recognised only because they do not possess a cost) Tj0 -10.08 TD 0.0047 Tc 3.3164 Tw (or other value that can be measured reliably may also warrant) TjT* 0.0052 Tc 1.0839 Tw (disclosure in the notes in the financial report because knowledge of) TjT* 0.0058 Tc 1.5834 Tw (the assets is considered to be relevant to the users of the financial) TjT* 0.0048 Tc 2.1643 Tw (report in making and evaluating decisions about the allocation of) TjT* 0.0051 Tc 0.8113 Tw (scarce resources. For example, an entity may, at the reporting date,) TjT* 0.0051 Tc 0.7241 Tw (be engaged in litigation in pursuit of a claim for damages. While it) TjT* 0.0051 Tc 0.652 Tw (may be probable that future economic benefits will eventuate, it may) TjT* 0.0053 Tc 6.1638 Tw (be impossible to reliably measure the value of the claim.) TjT* 0.0059 Tc 0.3872 Tw (Nonetheless, disclosure of the claim, if material, could assist users in) TjT* 0.0052 Tc 3.934 Tw (making assessments related to the present and expected future) TjT* 0.0061 Tc 0.003 Tw (financial position of the entity.) Tj-28.8 -30.24 TD /F2 10.08 Tf0.0057 Tc 0 Tw (Liabilities) TjET142.08 254.4 41.04 0.48 re fBT170.88 235.92 TD0.0043 Tc (Definition) TjET170.88 234.24 41.04 0.48 re fBT142.08 215.76 TD/F0 10.08 Tf0 Tc (48) Tj28.8 0 TD /F1 10.08 Tf0.0049 Tc 1.8042 Tw ("Liabilities" are the future sacrifices of economic benefits that) Tj0 -10.08 TD 0.0046 Tc 0.2845 Tw (the entity is presently obliged to make to other entities as a result) TjT* 0.0045 Tc 0.0046 Tw (of past transactions or other past events.) TjETendstreamendobj41 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj42 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (22) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) TjETendstreamendobj43 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj44 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (23) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD /F2 10.08 Tf0.0054 Tc 0.0037 Tw (Essential Characteristics of Liabilities) TjET170.88 647.52 156.48 0.48 re fBT142.08 629.04 TD/F0 10.08 Tf0 Tc 0 Tw (49) Tj28.8 0 TD 0.0055 Tc 0.7052 Tw (The existence of a liability at law is usually a clear indication of the) Tj0 -10.08 TD 0.005 Tc 0.6707 Tw (existence of a liability for financial reporting purposes; however, the) TjT* 0.0054 Tc 3.2037 Tw (attributes of a legal liability may be unnecessarily restrictive in) TjT* 0.0051 Tc 0.94 Tw (defining a liability. Paragraphs 51 to 64 identify the characteristics) TjT* 0.0058 Tc 0.0033 Tw (which are considered essential to the existence of a liability.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (50) Tj28.8 0 TD 0.006 Tc 4.5932 Tw (The definition of liabilities identifies the essential features of) Tj0 -10.08 TD 0.0053 Tc 1.2693 Tw (liabilities but does not specify the conditions that would need to be) TjT* 0.0051 Tc 3.0521 Tw (met before a liability qualifies for recognition. Criteria for the) TjT* 0.0048 Tc 0.4843 Tw (recognition of liabilities are set out in paragraph 65 and discussed in) TjT* 0.003 Tc 0.0062 Tw (paragraphs 66 to 69.) Tj0 -20.16 TD /F2 10.08 Tf0.0038 Tc 0.0053 Tw (Existence of a present obligation) TjET170.88 506.4 133.92 0.48 re fBT142.08 487.92 TD/F0 10.08 Tf0 Tc 0 Tw (51) Tj28.8 0 TD 0.0061 Tc 0.963 Tw (An essential characteristic of a liability is the exist) Tj212.16 0 TD 0.0053 Tc 0.9638 Tw (ence of a present) Tj-212.16 -10.08 TD 0.0049 Tc 2.9278 Tw (obligation, being a duty or responsibility of the entity to act or) Tj0 -10.08 TD 0.0053 Tc 0.7893 Tw (perform in a certain way. An obligation implies the involvement of) TjT* 0.0052 Tc 1.6839 Tw (two separate parties, namely the entity and a party external to the) TjT* 0.0058 Tc 2.8833 Tw (entity, since the same party cannot be both the recipient of the) TjT* 0.0042 Tc 0.0049 Tw (performance and the party under the duty to perform.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (52) Tj28.8 0 TD 0.0055 Tc 0.0774 Tw (It is not necessary that the identity of the party to whom an obligation) Tj0 -10.08 TD 0.0046 Tc 1.9614 Tw (is owed be known in order for a present obligation to exist. For) TjT* 0.0047 Tc 0.4364 Tw (example, an employer may have a present obligation for long service) TjT* 0.0053 Tc 2.0678 Tw (leave without knowing the identity of each of the employees who) TjT* 0.0053 Tc 0.4359 Tw (ultimately will qualify for payment. Similarly, a general insurer will) TjT* 0.0043 Tc 0.1357 Tw (have a present obligation for claims incurred but not reported prior to) TjT* 0.0052 Tc 0.7239 Tw (the reporting date. A present obligation means that a transaction or) TjT* 0.0057 Tc 0.6865 Tw (other event in the past has given rise to an obligation which has not) TjT* 0.0061 Tc 0.003 Tw (yet been satisfied.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (53) Tj28.8 0 TD 0.0047 Tc 0.7244 Tw (The party to whom a present obligation is owed may differ from the) Tj0 -10.08 TD 0.0051 Tc 0.2659 Tw (party or parties which will receive goods or services as satisfaction of) TjT* 0.0048 Tc 1.3003 Tw (the obligation. For example, a multiple subscriber to a publication) TjT* 0.0049 Tc 0.8922 Tw (may nominate various parties to whom copies of the publication are) TjT* 0.005 Tc 0.6761 Tw (to be provided. Nevertheless, the present obligation of the publisher) TjT* 0.0051 Tc 0.0041 Tw (for subscriptions received in advance is to the multiple subscriber.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (54) Tj28.8 0 TD 0.0055 Tc 3.2303 Tw (Most obligations are legally enforceable in that they stem from) Tj0 -10.08 TD 0.0046 Tc 0.5912 Tw (legally binding contracts or are imposed by legally authorised bodies) TjT* 0.0049 Tc 4.0542 Tw (or government statutes. Examples of obligations arising from) TjT* 0.0046 Tc 1.0845 Tw (contractual arrangements include amounts borrowed; amounts owed) TjT* 0.005 Tc 2.5374 Tw (for assets purchased; amounts owed for obtaining the services of) TjT* 0.0042 Tc 1.4689 Tw (labour; and obligations to provide goods or services to parties who) TjT* 0.0049 Tc 1.4879 Tw (have, as part of a reciprocal transaction, paid in advance for those) TjETendstreamendobj45 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj46 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (24) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0052 Tc 2.3773 Tw (items. Obligations imposed on an entity would include damages) Tj0 -10.08 TD 0.0048 Tc 2.2177 Tw (awarded in a law suit, claims owed under workers' compensation) TjT* 0.0056 Tc 4.495 Tw (schemes, obligations under legislation or licence conditions to) TjT* 0.0057 Tc 0.0035 Tw (rehabilitate mine sites, and income tax payable.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (55) Tj28.8 0 TD 0.0049 Tc 2.9909 Tw (Obligations can also be equitable or constructive. An equitable) Tj0 -10.08 TD 0.0048 Tc 0.7963 Tw (obligation is governed by social or moral sanctions or custom rather) TjT* 0.0059 Tc 0.5016 Tw (than legal sanctions; that is, it stems from a duty to another entity to) TjT* 0.0053 Tc 2.3558 Tw (do that which an ordinary conscience and sense of justice would) TjT* -0.0086 Tc 0.6738 Tw (deem fair, just and right \226 to do what one ought to do in the pursuit) TjT* 0.0051 Tc 0.1641 Tw (of one's objectives rather than only what one is legally required to do.) TjT* 0.0047 Tc 2.8044 Tw (An example of an equitable obligation is where a profit-seeking) TjT* 0.0053 Tc 0.9638 Tw (entity, based on moral considerations, undertakes to rectify faults in) TjT* 0.005 Tc 2.9561 Tw (one of its products even where these become apparent after the) TjT* 0.0046 Tc 0.2845 Tw (warranty period has expired. As a result, the amounts expected to be) TjT* 0.005 Tc 0.7001 Tw (sacrificed in accordance with this policy in relation to goods already) TjT* 0.005 Tc 0.0041 Tw (sold would constitute an obligation.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (56) Tj28.8 0 TD 0.0049 Tc 1.0709 Tw (A constructive obligation is created, inferred, or construed from the) Tj0 -10.08 TD 0.0051 Tc 1.9507 Tw (facts in a particular situation rather than contracted by agreement) TjT* 0.005 Tc 1.9024 Tw (with another entity or imposed by government. An example of a) TjT* 0.0052 Tc 2.5 Tw (constructive obligation is where an entity has a policy of paying) TjT* 0.005 Tc 2.1908 Tw (periodic bonuses to employees even though it is not contractually) TjT* 0.0042 Tc 0.2249 Tw (bound to do so, and bonuses for the current reporting period have not) TjT* 0.0049 Tc 0.0042 Tw (yet been paid.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (57) Tj28.8 0 TD 0.005 Tc 0.375 Tw (There is no doubt that legally enforceable obligations of an entity are) Tj0 -10.08 TD 0.0057 Tc 4.0835 Tw (liabilities. However, the concept of liabilities adopted in this) TjT* 0.0058 Tc 0.8605 Tw (Statement encompasses the financial obligations imposed by notions) TjT* 0.0051 Tc 1.4004 Tw (of equity or fairness, and by custom or usual business practices, as) TjT* 0.0053 Tc 3.5138 Tw (well as those resulting from legally enforceable contracts, from) TjT* 0.005 Tc 1.2041 Tw (imposition by legally authorised bodies, from statutes or from torts.) TjT* 0.0055 Tc 1.9536 Tw (While, in practice, difficulties may be encountered in determining) TjT* 0.0052 Tc 1.6239 Tw (whether equitable or constructive obligations exist, it is considered) TjT* 0.0052 Tc 1.4919 Tw (that knowledge of such obligations is relevant to users of financial) TjT* 0.0049 Tc 1.7376 Tw (reports in making and evaluating decisions about the allocation of) TjT* 0.0052 Tc 0.004 Tw (scarce resources.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (58) Tj28.8 0 TD 0.0057 Tc 1.8994 Tw (The existence of a present obligation is easily established in most) Tj0 -10.08 TD 0.0052 Tc 0.0572 Tw (cases. Most obligations are evidenced by formal documentation, such) TjT* 0.0052 Tc 1.324 Tw (as contracts, and are legally enforceable by the other party. In the) TjT* 0.0055 Tc 2.4756 Tw (absence of a clear legal responsibility, the existence of a present) TjT* 0.0051 Tc 0.004 Tw (obligation is a matter for determination from the evidence available.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (59) Tj28.8 0 TD 0.0052 Tc 0.9106 Tw (It is important to distinguish between present obligations and future) Tj0 -10.08 TD 0.0058 Tc 0.7669 Tw (commitments to ensure that too wide a definition of liabilities is not) TjT* 0.0056 Tc 1.7555 Tw (adopted. The mere intention to sacrifice economic benefits in the) TjETendstreamendobj47 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj48 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (25) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0053 Tc 1.4438 Tw (future is not sufficient to give rise to a liability. For example, the) Tj0 -10.08 TD 0.0053 Tc 0.942 Tw (management of an entity may decide to acquire assets in the future.) TjT* 0.0054 Tc 1.7237 Tw (Such a decision does not, of itself, create a present obligation. A) TjT* 0.0052 Tc 0.8199 Tw (liability would normally only arise when the entity had acquired the) TjT* 0.0049 Tc 0.3442 Tw (assets and was obliged to pay for them. Further, the formal adoption) TjT* 0.0046 Tc 5.3378 Tw (of a budget, the passing of appropriation legislation or the) TjT* 0.0047 Tc 2.4764 Tw (establishment of a grant programme by a government do not, of) TjT* 0.0055 Tc 1.0436 Tw (themselves, create present obligations for the government. Only on) TjT* 0.0042 Tc 1.9249 Tw (the subsequent placing of orders or approval of grant applications) TjT* 0.0051 Tc 0.004 Tw (does a present obligation arise.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (60) Tj28.8 0 TD 0.0054 Tc 1.64 Tw (Furthermore, the action of an entity in setting aside reserves for a) Tj0 -10.08 TD 0.005 Tc 2.1241 Tw (future event does not give rise to a liability. For example, some) TjT* 0.0051 Tc 2.404 Tw (entities that carry out overhauls, repairs and renewals relating to) TjT* 0.0044 Tc 0.8847 Tw (major items of property, plant and equipment regularly "provide" in) TjT* 0.0048 Tc 1.0298 Tw (their financial reports for such work to be undertaken in the future,) TjT* 0.0053 Tc 0.1478 Tw (with concomitant recognition of an expense. These provisions do not) TjT* 0.0059 Tc 0.6578 Tw (satisfy the definition of liabilities, because the entity does not have a) TjT* 0.0047 Tc 4.1645 Tw (present obligation to an external party. An obligation would) TjT* 0.0046 Tc 3.5778 Tw (normally only arise when the future repair work is performed.) TjT* 0.0053 Tc 0.2705 Tw (However, application of the concepts in this Statement would involve) TjT* 0.0051 Tc 3.244 Tw (the recognition of depreciation expenses as the future economic) TjT* 0.005 Tc 2.8242 Tw (benefits embodied in existing components of property, plant and) TjT* 0.0055 Tc 0.68 Tw (equipment are consumed in the operations of the entity. Also, some) TjT* 0.0055 Tc 2.2665 Tw (entities create "provisions" for uninsured future losses $sometimes) TjT* 0.005 Tc 1.9841 Tw (known as "self-insurance provisions"$ for the purpose of retaining) TjT* 0.006 Tc 0.9117 Tw (funds in the entity to meet losses which may arise in the future. In) TjT* 0.0057 Tc 0.5053 Tw (these situations, the entity does not have an obligation to an external) TjT* 0.0044 Tc 0.812 Tw (party. An obligation would only arise when a future event occurred) TjT* 0.0058 Tc 2.2433 Tw (which would necessitate the sacrifice of economic benefits by the) TjT* 0.0069 Tc 0 Tw (entity.) Tj0 -20.16 TD /F2 10.08 Tf0.0042 Tc 0.0049 Tw (Obligation involves settlement in the future: sacrifice of economic) TjET170.88 324.96 269.28 0.48 re fBT170.88 316.56 TD0.0049 Tc 0 Tw (benefits) TjET170.88 314.88 31.44 0.48 re fBT142.08 296.4 TD/F0 10.08 Tf0 Tc (61) Tj28.8 0 TD 0.0059 Tc 1.8273 Tw (Another essential characteristic of a liability is that it has adverse) Tj0 -10.08 TD 0.0058 Tc 1.2251 Tw (financial consequences for the entity in that the entity is obliged to) TjT* 0.0058 Tc 3.4113 Tw (sacrifice economic benefits to one or more entities. Thus, the) TjT* 0.0053 Tc 0.9399 Tw (existence of a liability depends on the present obligation being such) TjT* 0.0055 Tc 0.3156 Tw (that the legal, social, political or economic consequences of failing to) TjT* 0.0054 Tc 0.1564 Tw (honour the obligation leave the entity little, if any, discretion to avoid) TjT* 0.0055 Tc 0.4618 Tw (the future sacrifice of economic benefits to another entity. Where an) TjT* 0.0048 Tc 1.6189 Tw (entity places an order for the purchase of goods, for example, this) TjT* 0.0057 Tc 0.7035 Tw (action would not, of itself, normally give rise to a liability, since the) TjT* 0.005 Tc 0.1241 Tw (entity would normally have the discretion to avoid the future sacrifice) TjT* 0.0052 Tc 1.5749 Tw (of economic benefits by being able to cancel the order without the) TjT* 0.0049 Tc 2.0115 Tw (other party being able to enforce performance by the entity. The) TjETendstreamendobj49 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj50 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (26) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0047 Tc 1.2699 Tw (receipt of the goods would normally be the event that would create) Tj0 -10.08 TD 0.0051 Tc 3.884 Tw (the liability. However, if the goods were to be made to the) TjT* 0.0056 Tc 1.2036 Tw (specifications of the purchaser, it may not be possible to cancel the) TjT* 0.0046 Tc 1.4711 Tw (order after, say, the supplier commenced manufacture of the goods) TjT* 0.005 Tc 0.2642 Tw (because legal remedies are available to the other party, in the form of) TjT* 0.0046 Tc 0.9045 Tw (court orders for specific performance or in the form of a penalty set) TjT* 0.0056 Tc 0.1102 Tw (sufficiently large as, in normal circ*mstances, to deter cancellation of) TjT* 0.0056 Tc 1.5744 Tw (the order. In these circ*mstances a liability would exist when the) TjT* 0.0046 Tc 0.0046 Tw (supplier commenced manufacture of the goods.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (62) Tj28.8 0 TD 0.0054 Tc 0.5492 Tw (The future sacrifices of economic benefits that an entity is obliged to) Tj0 -10.08 TD 0.0052 Tc 0.8439 Tw (make to other entities may be in various forms. For example, those) TjT* 0.0054 Tc 2.1638 Tw (sacrifices may be in the form of transfers of goods, cash or cash) TjT* 0.0051 Tc 0.82 Tw (equivalents to other entities and/or the using up of plant, equipment) TjT* 0.0049 Tc 0.8333 Tw (and consumable stores in the provision of goods or services to other) TjT* 0.0052 Tc 2.0679 Tw (entities. The bases and techniques which may be appropriate for) TjT* 0.0052 Tc 0.353 Tw (measurement of each of these forms of sacrifice are beyond the scope) TjT* 0.006 Tc 2.2432 Tw (of this Statement. These issues will be the subject of a separate) TjT* 0.0056 Tc 0.0036 Tw (Statement of Accounting Concepts.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (63) Tj28.8 0 TD 0.0049 Tc 3.2682 Tw (Settlement of the obligation may be required on demand, on a) Tj0 -10.08 TD 0.0051 Tc 0.7609 Tw (specified date or on the happening of a specified event. As is noted) TjT* 0.0048 Tc 1.2243 Tw (in paragraph 61, for a liability to exist the obligation must be such) TjT* 0.0055 Tc 0.8036 Tw (that the entity has little or no discretion to avoid the future sacrifice) TjT* 0.0059 Tc 1.4869 Tw (of economic benefits in satisfaction of the obligation. If the entity) TjT* 0.0051 Tc 0.8549 Tw (obliged to make the settlement had an unfettered right to decide the) TjT* 0.0055 Tc 2.6436 Tw (settlement date, it would have complete discretion as to whether) TjT* 0.0048 Tc 0.1723 Tw (economic benefits were to be sacrificed for that purpose and therefore) TjT* 0.0053 Tc 0.0039 Tw (a liability would not exist in respect of the obligation.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (64) Tj28.8 0 TD 0.007 Tc (Wh) Tj14.64 0 TD 0.0055 Tc 0.1564 Tw (ile a high degree of certainty of settlement may be associated with) Tj-14.64 -10.08 TD 0.0059 Tc 1.3832 Tw (some liabilities, others may involve significant uncertainty. Where) Tj0 -10.08 TD 0.0053 Tc 2.3318 Tw (settlement of an obligation is required on demand, there exists a) TjT* 0.0052 Tc 0.833 Tw (possibility that the demand may never be made by the party entitled) TjT* 0.0062 Tc 0.843 Tw (to the economic benefits. Alternatively, the event which signals the) TjT* 0.0054 Tc 0.3528 Tw (necessity for the sacrifice of economic benefits may never occur. For) TjT* 0.0051 Tc 0.6149 Tw (instance, the granting of a guarantee for a loan creates an obligation) TjT* 0.0059 Tc 0.2673 Tw (to sacrifice economic benefits to another entity were settlement of the) TjT* 0.0046 Tc 0.8554 Tw (obligation to be required. However, until the borrower defaults it is) TjT* 0.0046 Tc 2.4285 Tw (not known whether the guarantor will be required to honour the) TjT* 0.0055 Tc 1.3636 Tw (guarantee. In these circ*mstances, the liability created by entering) TjT* 0.0051 Tc 1.7058 Tw (into the guarantee will only qualify for recognition if and when it) TjT* 0.0051 Tc 1.124 Tw (becomes probable that the borrower will default and settlement will) TjT* 0.0035 Tc 0.0056 Tw (be required.) TjETendstreamendobj51 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj52 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (27) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD /F2 10.08 Tf0.0048 Tc 0.0043 Tw (Criteria for Recognition of Liabilities) TjET170.88 647.52 153.12 0.48 re fBT142.08 629.04 TD/F0 10.08 Tf0 Tc 0 Tw (65) Tj28.8 0 TD /F1 10.08 Tf0.0048 Tc 2.8309 Tw (A liability should be recognised in the statement of financial) Tj0 -10.08 TD 0.0047 Tc 0.0044 Tw (position when and only when:) Tj0 -20.16 TD 0.0022 Tc 0 Tw ($a$) Tj28.8 0 TD 0.0047 Tc 0.4577 Tw (it is probable that the future sacrifice of economic benefits) Tj0 -10.08 TD 0.0052 Tc 0.0039 Tw (will be required; and) Tj-28.8 -20.16 TD 0.0043 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0046 Tc 0.0045 Tw (the amount of the liability can be measured reliably.) Tj-28.8 -20.16 TD /F2 10.08 Tf0.0041 Tc 0.005 Tw (Probability of future sacrifice of economic benefits being required) TjET170.88 546.72 270 0.48 re fBT142.08 528.24 TD/F0 10.08 Tf0 Tc 0 Tw (66) Tj28.8 0 TD 0.0056 Tc 0.2916 Tw (In paragraph 61 of this Statement, one of the essential characteristics) Tj0 -10.08 TD 0.0052 Tc 3.6039 Tw (of a liability was identified as being that a future sacrifice of) TjT* 0.0049 Tc 0.8115 Tw (economic benefits will be required. The probability of a sacrifice of) TjT* 0.0051 Tc 0.172 Tw (economic benefits being required in the future to satisfy an obligation) TjT* 0.005 Tc 0.1961 Tw (ranges from virtual certainty to virtually no chance. Obligations may) TjT* 0.0046 Tc 2.3245 Tw (range from being mature, whereby they are due immediately and) TjT* 0.0052 Tc 4.0839 Tw (performance is not subject to the happening of any event; to) TjT* 0.0052 Tc 0.4839 Tw (unconditional, in which only the passage of time is required to make) TjT* 0.005 Tc 1.0241 Tw (their performance due; to conditional obligations, which require the) TjT* 0.005 Tc 0.2241 Tw (occurrence of an event that is not certain to occur before they become) TjT* 0.0054 Tc 1.0971 Tw (either unconditional or mature. Hence, whether a liability qualifies) TjT* 0.0048 Tc 4.4843 Tw (for recognition depends on the probability of the sacrifice of) TjT* 0.0049 Tc 4.6176 Tw (economic benefits being required in the future. Mature and) TjT* 0.0051 Tc 1.4783 Tw (unconditional obligations clearly satisfy any criterion regarding the) TjT* 0.0047 Tc 0.3511 Tw (probability of the future sacrifice of economic benefits being required) TjT* 0.0059 Tc 1.1552 Tw (and, subject to meeting the test of reliable measurement, satisfy the) TjT* 0.0053 Tc 6.4495 Tw (criteria for recognition as liabilities. However, conditional) TjT* 0.0056 Tc 0.1635 Tw (obligations which meet the test of reliable measurement would satisfy) TjT* 0.0056 Tc 1.0036 Tw (the recognition criteria only if it is probable that the event that will) TjT* 0.0056 Tc 0.0035 Tw (necessitate the future sacrifice of economic benefits will occur.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (67) Tj28.8 0 TD 0.0059 Tc 2.1414 Tw (This Statement states that a liability should be recognised if it is) Tj0 -10.08 TD 0.0047 Tc 0.7244 Tw (probable that a future sacrifice of economic benefits will be required) TjT* 0.0051 Tc 0.564 Tw (in satisfaction of a present obligation, provided the other recognition) TjT* 0.0058 Tc 0.0906 Tw (criterion is also satisfied. The term "probable" means that the chance) TjT* 0.0049 Tc 1.6842 Tw (of the future sacrifice of economic benefits being required is more) TjT* 0.0059 Tc 0.0032 Tw (likely rather than less likely.) Tj0 -20.16 TD /F2 10.08 Tf0.0039 Tc 0.0053 Tw (Reliable measurement) TjET170.88 244.32 90.24 0.48 re fBT142.08 225.84 TD/F0 10.08 Tf0 Tc 0 Tw (68) Tj28.8 0 TD 0.0034 Tc 0.0058 Tw (For a ) Tj23.76 0 TD 0.0059 Tc 0.1472 Tw (liability to satisfy the recognition criteria it is necessary that the) Tj-23.76 -10.08 TD 0.0051 Tc 0.004 Tw (amount of the liability can be measured reliably.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (69) Tj28.8 0 TD 0.005 Tc 5.6141 Tw (The amount recorded as a liability represents the monetary) Tj0 -10.08 TD 0.0054 Tc 2.777 Tw (expression of the obligation to sacrifice economic benefits. The) TjETendstreamendobj53 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj54 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (28) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0054 Tc 0.3237 Tw (measurement of different liabilities can vary in reliability. Verifiable) Tj0 -10.08 TD 0.005 Tc 2.4641 Tw (evidence of the nominal amounts to be paid and of the dates of) TjT* 0.0057 Tc 2.4994 Tw (payment is available for the majority of liabilities, such as those) TjT* 0.0047 Tc 3.8204 Tw (resulting from the purchase of goods or services, or from the) TjT* 0.0053 Tc 1.3638 Tw (borrowing of money to finance the entity. At the other extreme, a) TjT* 0.0053 Tc 0.0039 Tw (liability may have a range of possible nominal values.) Tj0 -20.16 TD /F2 10.08 Tf0.0044 Tc 0.0047 Tw (Disclosure where the recognition criteria are not met) TjET170.88 576.96 216.96 0.48 re fBT142.08 558.48 TD/F0 10.08 Tf0 Tc 0 Tw (70) Tj28.8 0 TD 0.0052 Tc 1.553 Tw (Liabilities that are not recognised because it is not probable that a) Tj0 -10.08 TD 0.0048 Tc 1.8176 Tw (future sacrifice of economic benefits will be required may warrant) TjT* 0.0052 Tc 1.0839 Tw (disclosure in the notes in the financial report because knowledge of) TjT* 0.0057 Tc 0.3834 Tw (the liabilities is considered to be relevant to the users of the financial) TjT* 0.0048 Tc 2.1643 Tw (report in making and evaluating decisions about the allocation of) TjT* 0.0051 Tc 0.8113 Tw (scarce resources. For example, an entity may, at the reporting date,) TjT* 0.005 Tc 0.6041 Tw (be engaged in litigation in defence of a claim for a specified amount) TjT* 0.0052 Tc 0.1785 Tw (of damages. The claim may meet the recognition criterion of reliable) TjT* 0.0051 Tc 1.9241 Tw (measurement, but may fail to qualify for recognition as a liability) TjT* 0.0056 Tc 2.3075 Tw (because, in the particular circ*mstances of the entity, it does not) TjT* 0.0049 Tc 4.3242 Tw (satisfy the recognition criterion of probable future sacrifice of) TjT* 0.0053 Tc 0.9104 Tw (economic benefits. However, information about the liability may be) TjT* 0.0052 Tc 2.884 Tw (considered to be relevant to the users of the financial report in) TjT* 0.005 Tc 3.6942 Tw (making and evaluating decisions about the allocation of scarce) TjT* 0.0052 Tc 0.2679 Tw (resources, and accordingly may warrant disclosure in the notes in the) TjT* 0.0052 Tc 0.0039 Tw (financial report.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (71) Tj28.8 0 TD 0.0052 Tc 1.2039 Tw (Liabilities that are not recognised because they cannot be measured) Tj0 -10.08 TD 0.0057 Tc 2.2835 Tw (reliably may also warrant disclosure in the notes in the financial) TjT* 0.0049 Tc 3.8976 Tw (report because knowledge of the liabilities is considered to be) TjT* 0.0051 Tc 1.5401 Tw (relevant to the users of financial reports in making and evaluating) TjT* 0.0051 Tc 1.132 Tw (decisions about the allocation of scarce resources. For example, an) TjT* 0.0048 Tc 0.0043 Tw (entity may have a liability for warranty repairs for a new product line,) TjT* 0.0051 Tc 0.0041 Tw (or a liability for the repair of environmental damage the cost of which) TjT* 0.0059 Tc 2.1632 Tw (is to be assessed by a court. While in either instance it may be) TjT* 0.0048 Tc 0.4603 Tw (probable that a future sacrifice of economic benefits will be required,) TjT* 0.0055 Tc 0.6364 Tw (in the particular circ*mstances of the entity it may be impossible for) TjT* 0.0055 Tc 1.1796 Tw (the liability to be measured reliably. Nonetheless, disclosure of the) TjT* 0.0061 Tc 0.819 Tw (liability, if material, could assist users in making assessments of the) TjT* 0.0052 Tc 0.0039 Tw (present and expected future financial position of the entity.) Tj0 -30.24 TD /F2 10.08 Tf0.004 Tc 0.0051 Tw (Discontinued Recognition of Assets and Liabilities) TjET170.88 234.24 205.68 0.48 re fBT142.08 215.76 TD/F0 10.08 Tf0 Tc 0 Tw (72) Tj28.8 0 TD 0.0052 Tc 2.2172 Tw (In applying the definitions and recognition criteria for assets and) Tj0 -10.08 TD 0.0051 Tc 0.46 Tw (liabilities, a previously recognised asset or liability would cease to be) TjT* 0.0059 Tc 0.4614 Tw (recognised when, and only when, it ceases to satisfy the definition of) TjETendstreamendobj55 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj56 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (29) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0056 Tc 1.3327 Tw (the element or ceases to satisfy either or both of the criteria for its) Tj0 -10.08 TD 0.0053 Tc 0 Tw (recognition.) Tj0 -20.16 TD /F2 10.08 Tf0.0048 Tc (Definitions) TjET170.88 617.28 44.88 0.48 re fBT142.08 598.8 TD/F0 10.08 Tf0 Tc (73) Tj28.8 0 TD 0.0055 Tc 0.6436 Tw (The definition of assets would cease t) Tj155.04 0 TD 0.006 Tc 0.7231 Tw (o be satisfied where an asset is) Tj-155.04 -10.08 TD 0.0052 Tc 1.1079 Tw (sold or settled $for example, settlement through collection in full of) Tj0 -10.08 TD 0.0052 Tc 0.676 Tw (an account receivable$, where the entity loses control over the future) TjT* 0.0056 Tc 0.3236 Tw (economic benefits comprising an asset $for example, where the entity) TjT* 0.0052 Tc 1.2039 Tw (is unable to renew a property lease and loses its right to the leased) TjT* 0.0051 Tc 0.064 Tw (property, including leasehold improvements$ or where an asset ceases) TjT* 0.0049 Tc 1.0176 Tw (to comprise future economic benefits $for example, where an option) TjT* 0.0051 Tc 4.9907 Tw (held by the entity expires, or where equipment suffers total) TjT* 0.0055 Tc 0.6276 Tw (impairment$. The definition of liabilities would cease to be satisfied) TjT* 0.0052 Tc 3.064 Tw (where the obligation is settled $through payment, forgiveness or) TjT* 0.0052 Tc 0.7239 Tw (conversion into equity$ or where a creditor's claim against the entity) TjT* 0.0052 Tc 0.0039 Tw (lapses $for example, where an option written by the entity expires$.) Tj0 -20.16 TD /F2 10.08 Tf0.0041 Tc 0.005 Tw (Recognition criteria) TjET170.88 466.08 82.08 0.48 re fBT199.68 447.6 TD0.0041 Tc 0.005 Tw (Probable future benefit or probable future sacrifice) TjET199.68 445.92 209.76 0.48 re fBT142.08 427.44 TD/F0 10.08 Tf0 Tc 0 Tw (74) Tj28.8 0 TD 0.0067 Tc 0.2424 Tw (An asset ) Tj38.16 0 TD 0.0048 Tc 0.6763 Tw (would cease to qualify for recognition where it ceases to be) Tj-38.16 -10.08 TD 0.0053 Tc 0.4838 Tw (probable that the future economic benefits embodied in the asset will) Tj0 -10.08 TD 0.0049 Tc 0.4406 Tw (eventuate. A liability would cease to qualify for recognition where it) TjT* 0.0047 Tc 0.3367 Tw (ceases to be probable that the entity will be required to make a future) TjT* 0.0058 Tc 1.6833 Tw (sacrifice of economic benefits. ) Tj0 Tc 0.0091 Tw ( ) Tj136.08 0 TD 0.006 Tc 1.8271 Tw (These assessments may occur as a) Tj-136.08 -10.08 TD 0.0056 Tc 2.0545 Tw (result of a change in the entity's circ*mstances. $For example, a) Tj0 -10.08 TD 0.0052 Tc 1.2939 Tw (change in market conditions may indicate that further development) TjT* 0.0044 Tc 1.0247 Tw (of a product would not be viable and therefore that it is improbable) TjT* 0.0048 Tc 0.1243 Tw (that any recovery of product development costs recognised as an asset) TjT* 0.0052 Tc 0.2875 Tw (will occur. Another example is where a change in market conditions) TjT* 0.0051 Tc 1.9458 Tw (indicates that it is no longer probable that an underwriter will be) TjT* 0.0054 Tc 1.4437 Tw (called to meet a claim under an excess of loss insurance contract.$) TjT* 0.0054 Tc 1.9237 Tw (These assessments may also occur as a result of obtaining further) TjT* 0.0051 Tc 0.2707 Tw (information about the likelihood of benefits eventuating or a sacrifice) TjT* 0.0042 Tc 3.545 Tw (being required $for example, receiving further advice about the) TjT* 0.0049 Tc 0.8987 Tw (likelihood of a disputed claim for damages by, or against, the entity) TjT* 0.0042 Tc 0.0049 Tw (being proven$.) Tj28.8 -20.16 TD /F2 10.08 Tf0.0039 Tc 0.0053 Tw (Reliable measurement) TjET199.68 244.32 90.24 0.48 re fBT142.08 225.84 TD/F0 10.08 Tf0 Tc 0 Tw (75) Tj28.8 0 TD 0.0061 Tc 1.683 Tw (In some circ*mstances, an e) Tj120.72 0 TD 0.0052 Tc 1.7524 Tw (ntity may cease to be able to measure) Tj-120.72 -10.08 TD 0.0059 Tc 1.9432 Tw (reliably an asset or a liability, in which case the asset or liability) Tj0 -10.08 TD 0.0045 Tc 0.0046 Tw (would cease to qualify for recognition.) TjETendstreamendobj57 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj58 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (30) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD /F2 10.08 Tf0.0037 Tc 0.0054 Tw (Agreements Equally Proportionately Unperformed) TjET170.88 647.52 205.92 0.48 re fBT142.08 629.04 TD/F0 10.08 Tf0 Tc 0 Tw (76) Tj28.8 0 TD 0.0045 Tc 1.4047 Tw (Agreements equally proportionately unperformed are agreements in) Tj0 -10.08 TD 0.0055 Tc 1.8969 Tw (which neither party has fulfilled any promises, and agreements in) TjT* 0.0049 Tc 1.0733 Tw (which both parties have performed to an equal extent some of their) TjT* 0.0049 Tc 0.2006 Tw (promises while other promises have yet to be honoured. Examples of) TjT* 0.0048 Tc 0.4543 Tw (such agreements include purchase orders for materials or equipment,) TjT* 0.005 Tc 0.6898 Tw (leases, forward exchange contracts, commodity futures contracts and) TjT* 0.0055 Tc 0.0037 Tw (certain types of employment agreements.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (77) Tj28.8 0 TD 0.0041 Tc 2.245 Tw (Some agreements equally proportionately unperformed would give) Tj0 -10.08 TD 0.006 Tc 2.2504 Tw (rise to assets and liabilities. That is, some entities would obtain) TjT* 0.0048 Tc 0.6443 Tw (control over future economic benefits, and incur a present obligation) TjT* 0.0055 Tc 1.64 Tw (to sacrifice economic benefits in the future, as a result of entering) TjT* 0.0046 Tc 1.0245 Tw (into agreements which are equally proportionately unperformed. In) TjT* 0.0054 Tc 1.4874 Tw (some of those instances, it could be argued that those items would) TjT* 0.0059 Tc 0.1778 Tw (satisfy the definitions of assets and liabilities and the criteria for their) TjT* 0.0058 Tc 0.3524 Tw (recognition in the statement of financial position. In respect of some) TjT* 0.0047 Tc 1.2045 Tw (agreements which are equally proportionately unperformed, such as) TjT* 0.0056 Tc 0.7671 Tw (certain forms of lease, it is generally accepted that the definitions of) TjT* 0.0053 Tc 2.8571 Tw (assets and liabilities and the criteria for their recognition would) TjT* 0.0053 Tc 4.8038 Tw (normally be satisfied. However,) Tj149.76 0 TD /F1 10.08 Tf0 Tc 0.0091 Tw ( ) Tj7.44 0 TD /F0 10.08 Tf0.0052 Tc 4.8039 Tw (for many other agreements,) Tj-157.2 -10.08 TD 0.0058 Tc 1.71 Tw (significant uncertainty may exist as to whether the definitions and) Tj0 -10.08 TD 0.0052 Tc 3.6039 Tw (recognition criteria would be satisfied. In addition, substantial) TjT* 0.0049 Tc 3.6043 Tw (difficulties may arise in determining a reliable and appropriate) TjT* 0.0058 Tc 4.1367 Tw (measure for assets and liabilities which may arise from these) TjT* 0.0057 Tc 4.9901 Tw (agreements. These difficulties are reflected in the fact that) TjT* 0.0059 Tc 3.8966 Tw (recognition of all assets and liabilities which arise from these) TjT* 0.005 Tc 0.7774 Tw (agreements and satisfy the criteria for recognition would represent a) TjT* 0.005 Tc 1.0842 Tw (fundamental change to existing reporting practices in Australia and) TjT* 0.0058 Tc 0.0033 Tw (in overseas jurisdictions.) Tj-28.8 -30.24 TD /F2 10.08 Tf0.0031 Tc 0 Tw (Equity) TjET142.08 314.88 26.4 0.48 re fBT170.88 296.4 TD0.0043 Tc (Definition) TjET170.88 294.72 41.04 0.48 re fBT142.08 276.24 TD/F0 10.08 Tf0 Tc (78) Tj28.8 0 TD /F1 10.08 Tf0.005 Tc 1.2041 Tw ("Equity" is the residual interest in the assets of the entity after) Tj0 -10.08 TD 0.0057 Tc 0.0034 Tw (deduction of its liabilities.) Tj0 -30.24 TD /F2 10.08 Tf0.0038 Tc 0.0053 Tw (Nature of Equity) TjET170.88 234.24 67.68 0.48 re fBT142.08 215.76 TD/F0 10.08 Tf0 Tc 0 Tw (79) Tj28.8 0 TD 0.0057 Tc 2.0034 Tw (A statement of financial position for an entity comprises amounts) Tj0 -10.08 TD 0.0062 Tc 0.2865 Tw (assigned to the assets of the entity, amounts assigned to its liabilities,) TjT* 0.0055 Tc 0.1957 Tw (and a net amount, being the difference between the amounts assigned) TjETendstreamendobj59 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj60 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (31) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0061 Tc 0.303 Tw (to its assets and liabilities. This net amount represents an element of) Tj0 -10.08 TD 0.0062 Tc 0.0029 Tw (the statement of financial position.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (80) Tj28.8 0 TD 0.0054 Tc 0.1237 Tw (This element has been given various descri) Tj174.96 0 TD 0.0057 Tc 0.2434 Tw (ptions in financial reports.) Tj-174.96 -10.08 TD 0.0052 Tc 0.9639 Tw (For example, in the private sector it has been called equity, owners') Tj0 -10.08 TD 0.005 Tc 4.3241 Tw (equity, shareholders' equity, equity capital, capital, capital and) TjT* 0.0049 Tc 2.2842 Tw (reserves, partners' capital, shareholders' funds, proprietorship, and) TjT* 0.0052 Tc 2.7879 Tw (ownership; in the public sector it has been called equity, public) TjT* 0.0046 Tc 0.0046 Tw (equity, contributed equity, and government equity.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (81) Tj28.8 0 TD 0.0061 Tc 0.6575 Tw (In this Statement, the term "equity" has been chosen to describe this) Tj0 -10.08 TD 0.0059 Tc 0.4232 Tw (element. This expression is neutral, in that, unlike most of the other) TjT* 0.0051 Tc 0.004 Tw (terms referred to above, it implies nothing about the entity's operating) TjT* 0.0049 Tc 0.0043 Tw (structure or objectives.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (82) Tj28.8 0 TD 0.0054 Tc 0.3397 Tw (The liabilities and equity of an entity are mutually exclusive interests) Tj0 -10.08 TD 0.0058 Tc 0.5017 Tw (in the entity's assets by parties external to the entity. The concept of) TjT* 0.006 Tc 2.294 Tw (equity is defined in this Statement as the residual interest in the) TjT* 0.0068 Tc 0.6709 Tw (assets of an entity, that is, the interest in the assets of the entity that) TjT* 0.0055 Tc 0.3963 Tw (remains after deduction of its liabilities. The residual interest can be) TjT* 0.0058 Tc 0.0034 Tw (interpreted as a claim or right to the net assets of the entity.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (83) Tj28.8 0 TD 0.0052 Tc 0.6039 Tw (Defining equity as a residual is based on the view that equity cannot) Tj0 -10.08 TD 0.0054 Tc 3.8137 Tw (be defined independently of the other elements comprising the) TjT* 0.0058 Tc 1.1766 Tw (statement of financial position. Accordingly, the concepts of assets) TjT* 0.0051 Tc 1.6186 Tw (and liabilities must be defined before a definition of equity can be) TjT* 0.0046 Tc 0.0045 Tw (made operational.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (84) Tj28.8 0 TD 0.0056 Tc 0.225 Tw (For every entity, the residual rights to the assets of the entity are held) Tj0 -10.08 TD 0.0052 Tc 1.5839 Tw (by some party or parties who will be the recipient$s$ of any assets) TjT* 0.0059 Tc 1.6395 Tw (remaining after the liabilities of the entity have been satisfied. In) TjT* 0.0052 Tc 0.9879 Tw (relation to a profit-seeking entity that operates in the private sector,) TjT* 0.0057 Tc 0.0588 Tw (equity is the financial interest of the ownership group in the entity. It) TjT* 0.0056 Tc 0.5369 Tw (stems from ownership rights and involves a relationship between the) TjT* 0.0055 Tc 4.1796 Tw (entity and its owners as owners rather than as, for example,) TjT* 0.0051 Tc 0.564 Tw (employees, suppliers, customers or lenders. In a not-for-profit entity) TjT* 0.0056 Tc 0.1999 Tw (in the private sector, there is typically an absence of defined financial) TjT* 0.0049 Tc 1.9722 Tw (interests of an ownership group which can be sold, transferred or) TjT* 0.0055 Tc 0.44 Tw (redeemed, or that convey entitlement to a share of the residual assets) TjT* 0.0049 Tc 0.9827 Tw (in the event of the entity being wound up. However, some party or) TjT* 0.0056 Tc 0.9395 Tw (parties would be entitled to any assets remaining after the liabilities) TjT* 0.0051 Tc 1.2694 Tw (have been satisfied. In the case of both profit-seeking and not-for-) TjT* 0.0058 Tc 2.3313 Tw (profit entities in the public sector, it is normally the community,) TjT* 0.0056 Tc 1.7136 Tw (through its elected representatives in government, which holds the) TjT* 0.0056 Tc 0.0035 Tw (ultimate ownership rights.) TjETendstreamendobj61 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj62 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (32) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD /F2 10.08 Tf0.0048 Tc 0.0043 Tw (Characteristics of Equity) TjET170.88 647.52 102 0.48 re fBT142.08 629.04 TD/F0 10.08 Tf0 Tc 0 Tw (85) Tj28.8 0 TD 0.0053 Tc 0.621 Tw (Equity ranks after liabilities as a claim ) Tj164.16 0 TD 0.0065 Tc 0.7227 Tw (to the assets of an entity. In) Tj-164.16 -10.08 TD 0.0056 Tc 1.6636 Tw (the event of the entity being wound up, all liabilities must be met) Tj0 -10.08 TD 0.005 Tc 2.0042 Tw (before a distribution can be made to those parties with a right to) TjT* 0.0057 Tc 2.4834 Tw (participate in any assets remaining after the liabilities have been) TjT* 0.0058 Tc 0.1713 Tw (satisfied. This characteristic implies that equity is a residual interest;) TjT* 0.0067 Tc 0.2874 Tw (it is the claim to the net assets of the entity, that is, to the assets after) TjT* 0.0052 Tc 0.0039 Tw (liabilities have been deducted.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (86) Tj28.8 0 TD 0.005 Tc 0.9161 Tw (Equity bears the results of operations and the consequences of other) Tj0 -10.08 TD 0.0054 Tc 4.4837 Tw (events affecting the entity. Equity is enhanced by profitable) TjT* 0.0049 Tc 0.8202 Tw (operations and by contributions by owners. Equity is diminished by) TjT* 0.0048 Tc 0.0044 Tw (unprofitable operations and by distributions to owners.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (87) Tj28.8 0 TD 0.0057 Tc 0.8194 Tw (The assets and liabilities of an entity can be specified independently) Tj0 -10.08 TD -0.0063 Tc 0.1594 Tw (of the other elements \226 each asset represents future economic benefits) TjT* 0.0054 Tc 1.0947 Tw (controlled by the entity, and each liability is a present obligation of) TjT* 0.0056 Tc 0.1697 Tw (the entity. However, equity cannot be so specified: it is a net position) TjT* 0.0053 Tc 0.0039 Tw (or residual interest.) Tj0 -30.24 TD /F2 10.08 Tf0.0031 Tc 0.006 Tw (Components of Equity) TjET170.88 425.76 90 0.48 re fBT142.08 407.28 TD/F0 10.08 Tf0 Tc 0 Tw (88) Tj28.8 0 TD 0.005 Tc 3.3641 Tw (Equity is increased by contributions by owners and excesses of) Tj0 -10.08 TD 0.0052 Tc 1.6306 Tw (revenues over expenses resulting from the operations of the entity.) TjT* 0.0046 Tc 1.9485 Tw (Equity is decreased by excesses of expenses over revenues and by) TjT* 0.0052 Tc 0.2706 Tw (distributions to owners. Contributions by owners and distributions to) TjT* 0.004 Tc 0.0051 Tw (owners are discussed in paragraphs 145 and 146.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (89) Tj28.8 0 TD 0.0049 Tc 2.9082 Tw (Equity will be influenced by the concepts of capital and capital) Tj0 -10.08 TD 0.005 Tc 2.0574 Tw (maintenance adopted in the preparation of financial reports. The) TjT* 0.0052 Tc 1.7139 Tw (concepts of capital and capital maintenance adopted will influence) TjT* 0.0052 Tc 0.5559 Tw (the amount and components of equity where those concepts give rise) TjT* 0.0058 Tc 0.3767 Tw (to what can be termed measurement adjustments. These adjustments) TjT* 0.0037 Tc 0.0054 Tw (are discussed in paragraphs 147 and 148.) Tj0 -30.24 TD /F2 10.08 Tf0.0047 Tc 0.0045 Tw (Equity in Not-for-Profit Entities) TjET170.88 264.48 130.08 0.48 re fBT142.08 246 TD/F0 10.08 Tf0 Tc 0 Tw (90) Tj28.8 0 TD 0.0049 Tc 0.4542 Tw (Contributions made to not-for-profit entities by, for example, donors,) Tj0 -10.08 TD 0.0053 Tc 0.4538 Tw (members, governments and others are non-reciprocal transfers in the) TjT* 0.0048 Tc 1.3243 Tw (sense that the recipient is not required to give approximately equal) TjT* 0.0049 Tc 2.1909 Tw (value in exchange directly to the contributor $commentary on the) TjT* 0.0052 Tc 0.5906 Tw (characteristics of reciprocal and non-reciprocal transfers is set out in) TjT* 0.0043 Tc 0.2448 Tw (paragraphs 100 to 105$. Contributions made to not-for-profit entities) TjT* 0.0051 Tc 0.2876 Tw (are revenues unless they are of the nature of contributions by owners.) TjETendstreamendobj63 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj64 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (33) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0051 Tc 0.2098 Tw (Typically, contributions to not-for-profit entities are not contributions) Tj0 -10.08 TD 0.0046 Tc 3.6525 Tw (by owners because the contributors do not expect to receive a) TjT* 0.0053 Tc 1.3372 Tw (financial return commensurate with the assets provided, nor do the) TjT* 0.0054 Tc 0.5078 Tw (contributors obtain by way of the contributions a financial interest in) TjT* 0.0056 Tc 0.6435 Tw (the net assets of the entity that can be sold, transferred or redeemed.) TjT* 0.0054 Tc 0.2437 Tw (However, the contributors will normally have a continuing interest in) TjT* 0.0054 Tc 3.0703 Tw (how the entity deploys contributed assets and will often impose) TjT* 0.0051 Tc 0.004 Tw (temporary or permanent restrictions on their use.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (91) Tj28.8 0 TD 0.0056 Tc 2.0835 Tw (Restrictions impose fiduciary responsibilities on managements and) Tj0 -10.08 TD 0.0049 Tc 1.8523 Tw (governing bodies to ensure that contributed assets are used by the) TjT* 0.0056 Tc 0.8675 Tw (entity in the manner stipulated by the contributors. The restrictions) TjT* 0.0055 Tc 0.4436 Tw (may relate to specific assets; for example, the entity may be given an) TjT* 0.0053 Tc 0.6438 Tw (historical treasure with the stipulation that it be properly maintained) TjT* 0.0051 Tc 3.5386 Tw (and never sold. However, the entity is normally able to pool) TjT* 0.0056 Tc 2.9795 Tw (contributed assets with other assets and to sell or exchange the) TjT* 0.005 Tc 1.7375 Tw (contributed assets for other suitable assets provided that the future) TjT* 0.0053 Tc 3.6038 Tw (economic benefits represented by the contributed assets are not) TjT* 0.0048 Tc 2.4044 Tw (deployed in a way contrary to the contributors' stipulations. For) TjT* 0.0042 Tc 2.8129 Tw (example, assets may be provided for the purpose of acquiring a) TjT* 0.0052 Tc 0.1785 Tw (building, or for investing in securities the revenues from which are to) TjT* 0.0049 Tc 0.3042 Tw (be used to award scholarships for overseas study. In the former case,) TjT* 0.0055 Tc 2.4756 Tw (once the building has been acquired the restriction on the assets) TjT* 0.0048 Tc 1.2523 Tw (ceases and the building would be regarded as an unrestricted asset.) TjT* 0.0058 Tc 1.1596 Tw (In the latter case, the restriction on the assets would be permanent.) TjT* 0.0046 Tc 2.2446 Tw (As discussed in paragraphs 98 to 107, restrictions on contributed) TjT* 0.0057 Tc 0.6514 Tw (assets, whatever the form of the restriction, do not constitute present) TjT* 0.0055 Tc 0.0036 Tw (obligations of the entity and therefore do not, of themselves, cause the) TjT* 0.0058 Tc 0.0033 Tw (associated contributions to satisfy the definition of liabilities.) Tj0 -30.24 TD /F2 10.08 Tf0.0029 Tc 0.0062 Tw (Recognition of Equity) TjET170.88 335.04 88.8 0.48 re fBT142.08 316.56 TD/F0 10.08 Tf0 Tc 0 Tw (92) Tj28.8 0 TD 0.006 Tc 0.6492 Tw (Since equity is the residual interest in the assets of an entity and the) Tj0 -10.08 TD 0.0051 Tc 0.2222 Tw (amount assigned to equity will always correspond to the excess of the) TjT* 0.0058 Tc 3.0513 Tw (amounts assigned to its assets over the amounts assigned to its) TjT* 0.0058 Tc 2.6166 Tw (liabilities, the criteria for the recognition of assets and liabilities) TjT* 0.0046 Tc 0.0045 Tw (provide the criteria for the recognition of equity.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (93) Tj28.8 0 TD 0.0054 Tc 0.5557 Tw (If the aggregate amount assigned to an entity's liabilities exceeds the) Tj0 -10.08 TD 0.005 Tc 1.6602 Tw (aggregate amount assigned to its assets there would be no amount) TjT* 0.0046 Tc 2.2736 Tw (recognised as equity. What would be reported is a deficiency of) TjT* 0.0052 Tc 3.2572 Tw (reported assets compared with reported liabilities. As with the) TjT* 0.0044 Tc 2.218 Tw (reported amount of equity, the reported amount of any deficiency) TjT* 0.0058 Tc 0.4178 Tw (would depend on the bases on which the entity's assets and liabilities) TjT* 0.0049 Tc 0.1133 Tw (are recognised and measured. It is possible for the reported liabilities) TjT* 0.0048 Tc 0.4044 Tw (of an entity to exceed its reported assets and for the ownership group) TjETendstreamendobj65 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj66 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (34) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0051 Tc 2.0331 Tw (or, where there is an absence of an ownership group, some other) Tj0 -10.08 TD 0.0051 Tc 0.1641 Tw (party or parties with residual rights, to have an interest of some value) TjT* 0.0057 Tc 2.6634 Tw (in the entity. For example, assets may exist but not have been) TjT* 0.005 Tc 1.6841 Tw (recognised, or a measurement basis may have been adopted which) TjT* 0.005 Tc 0.2877 Tw (does not report the current value of the reported assets and liabilities.) TjT* 0.0057 Tc 0.4234 Tw (Notwithstanding this, the existence of legal restrictions, for example,) TjT* 0.0055 Tc 0.8436 Tw (may inhibit the ability of an entity that reports a deficiency to make) TjT* 0.0054 Tc 0.0037 Tw (distributions to owners.) Tj0 -30.24 TD /F2 10.08 Tf0.0041 Tc 0.005 Tw (Equity and Liabilities) TjET170.88 546.72 88.08 0.48 re fBT142.08 528.24 TD/F0 10.08 Tf0 Tc 0 Tw (94) Tj28.8 0 TD 0.0052 Tc 2.6439 Tw (The dis) Tj32.88 0 TD 0.0054 Tc 2.8237 Tw (tinction between equity and liabilities may be obscure in) Tj-32.88 -10.08 TD 0.0058 Tc 3.036 Tw (practice. Since equity has been defined in this Statement as a) Tj0 -10.08 TD 0.0058 Tc 0.43 Tw (residual interest, the classification of securities as equity or liabilities) TjT* 0.0059 Tc 3.0432 Tw (would involve an assessment of whether the securities meet the) TjT* 0.0056 Tc 0.0035 Tw (definition of liabilities and the criteria for recognition as liabilities.) Tj0 -20.16 TD /F2 10.08 Tf0.0051 Tc 0.0041 Tw (Profit-seeking entities) TjET170.88 466.08 89.28 0.48 re fBT142.08 447.6 TD/F0 10.08 Tf0 Tc 0 Tw (95) Tj28.8 0 TD 0.0058 Tc 3.0548 Tw (For profit-seeking entities, the distinction between liabilities and) Tj0 -10.08 TD 0.0051 Tc 0.4841 Tw (equity is based upon the legal status of, and the priority attaching to,) TjT* 0.0055 Tc 0.8236 Tw (the two types of claims. Liabilities are generally claims for a stated) TjT* 0.0052 Tc 3.2919 Tw (or determinable sum. Equity is not, because owners enjoy the) TjT* 0.0052 Tc 2.1159 Tw (rewards and bear the losses of the entity's operations. Moreover,) TjT* 0.0051 Tc 0.5276 Tw (settlement of liabilities may be required on demand, at a specified or) TjT* 0.0051 Tc 2.4477 Tw (determinable date, or on the happening of a specified event. In) TjT* 0.0057 Tc 0.0235 Tw (contrast, an entity is not obliged to transfer assets to its owners except) TjT* 0.0054 Tc 0.0222 Tw (where it formally acts to undertake a distribution, as in the case of the) TjT* 0.0049 Tc 0.8843 Tw (declaration of a dividend, or where the entity is being wound up, in) TjT* 0.006 Tc 0.0511 Tw (which case any assets remaining after the satisfaction of liabilities are) TjT* 0.0049 Tc 0.0042 Tw (distributed to owners.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (96) Tj28.8 0 TD 0.0057 Tc 0.2167 Tw (Difficulties in distinguishing liabilities from equity can arise in many) Tj0 -10.08 TD 0.0055 Tc 0.655 Tw (practical situations for profit-seeking entities. Profit-seeking entities) TjT* 0.0055 Tc 0.6997 Tw (may issue securities which appear to have the characteristics of both) TjT* 0.0056 Tc 0.1998 Tw (equity and liabilities. In addition, the names given to some securities) TjT* 0.0056 Tc 1.0435 Tw (may not be an accurate description of their essential characteristics.) TjT* 0.0053 Tc 5.5238 Tw (Examples of these types of securities are preference shares,) TjT* 0.0049 Tc 0.0043 Tw (convertible debt and "perpetual" capital notes.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (97) Tj28.8 0 TD 0.0054 Tc 0.0277 Tw (The classification of securities as liabilities or equity or as comprising) Tj0 -10.08 TD 0.0048 Tc 2.7129 Tw (equity and liability components should determine the appropriate) TjT* 0.0049 Tc 2.0115 Tw (treatment of amounts paid or payable to the security holders as a) TjT* 0.0058 Tc 3.7633 Tw (return on their investments in the entity. If a security, or a) TjT* 0.005 Tc 0.2442 Tw (component of a compound security, previously classified as a liability) TjT* 0.0048 Tc 0.3315 Tw (is reclassified as equity during the reporting period, the return on the) TjETendstreamendobj67 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj68 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (35) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0053 Tc 0.8765 Tw (security or the component of the security that accrues from the time) Tj0 -10.08 TD 0.005 Tc 1.9721 Tw (of the reclassification should be accounted for as a distribution to) TjT* 0.0058 Tc 0.0033 Tw (owners rather than as interest expense.) Tj0 -20.16 TD /F2 10.08 Tf0.0052 Tc 0.0039 Tw (Not-for-profit entities) TjET170.88 607.2 87.6 0.48 re fBT142.08 588.72 TD/F0 10.08 Tf0 Tc 0 Tw (98) Tj28.8 0 TD 0.0057 Tc 3.4663 Tw (For not-for-profit entities, the distinction between liabilities and) Tj0 -10.08 TD 0.0048 Tc 3.2043 Tw (equity may be obscured by the imposition by donors, members,) TjT* 0.0055 Tc 1.1136 Tw (governments and others of restrictions, whether explicit or implicit,) TjT* 0.0056 Tc 2.6035 Tw (on the use to which contributed assets may be put. An entity's) TjT* 0.0056 Tc 1.9235 Tw (responsibility to comply with the restrictions does not constitute a) TjT* 0.0044 Tc 0.7727 Tw (present obligation as discussed in paragraphs 51 to 60 and therefore) TjT* 0.0049 Tc 2.5375 Tw (does not, of itself, provide grounds for identifying the associated) TjT* 0.0057 Tc 1.79 Tw (contributions as liabilities. The determinant of whether an inflow) TjT* 0.0055 Tc 0.1882 Tw (gives rise to a liability or an increase in equity is whether the transfer) TjT* 0.0046 Tc 0.7966 Tw (is reciprocal or non-reciprocal. This is discussed in paragraphs 100) TjT* 0.003 Tc 0.0061 Tw (to 105.) Tj28.8 -20.16 TD /F2 10.08 Tf0.0039 Tc 0.0052 Tw (Reciprocal and non-reciprocal transfers) TjET199.68 466.08 163.92 0.48 re fBT199.68 447.6 TD0.0048 Tc 0 Tw (Definitions) TjET199.68 445.92 44.88 0.48 re fBT142.08 427.44 TD/F0 10.08 Tf0 Tc (99) Tj28.8 0 TD /F1 10.08 Tf0.0044 Tc 1.5047 Tw ("Non-reciprocal transfer" means a transfer in which the entity) Tj0 -10.08 TD 0.0052 Tc 1.3239 Tw (receives assets or services or has liabilities extinguished without) TjT* 0.004 Tc 3.0951 Tw (directly giving approximately equal value in exchange to the) TjT* 0.0039 Tc 0.0052 Tw (other party or parties to the transfer; and) Tj0 -20.16 TD 0.0045 Tc 3.7846 Tw ("Reciprocal transfer" means a transfer in which the entity) Tj0 -10.08 TD 0.0052 Tc 3.3639 Tw (receives assets or services or has liabilities extinguished and) TjT* 0.0041 Tc 0.485 Tw (directly gives approximately equal value in exchange to the other) TjT* 0.0041 Tc 0.005 Tw (party or parties to the transfer.) Tj28.8 -20.16 TD /F2 10.08 Tf0.0046 Tc 0.0045 Tw (Characteristics of reciprocal and non-reciprocal transfers) TjET199.68 324.96 237.12 0.48 re fBT142.08 306.48 TD/F0 10.08 Tf0 Tc 0 Tw (100) Tj28.8 0 TD 0.0049 Tc 1.2042 Tw (Not-for-profit entities) Tj88.56 0 TD 0.0047 Tc 1.3759 Tw ( obtain assets or services to provide particular) Tj-88.56 -10.08 TD 0.0052 Tc 3.6572 Tw (types of goods and services to consumers and beneficiaries, in) Tj0 -10.08 TD 0.0054 Tc 0.0637 Tw (accordance with their objectives. Contributions, whether restricted or) TjT* 0.0049 Tc 2.6785 Tw (unrestricted, to a not-for-profit entity are non-reciprocal transfers) TjT* 0.0056 Tc 3.0275 Tw (which are made to maintain or increase the entity's capacity to) TjT* 0.0046 Tc 0.0046 Tw (provide those goods and services.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (101) Tj28.8 0 TD 0.0054 Tc 0.0037 Tw (For transfers to an entity to create a present obligation on the entity to) Tj0 -10.08 TD 0.0049 Tc 2.5542 Tw (make future sacrifices of economic benefits to particular external) TjT* 0.005 Tc 3.5774 Tw (parties, the transfers would need to be reciprocal, whereby the) TjT* 0.0047 Tc 0.6215 Tw (transferor and transferee directly receive and sacrifice approximately) TjT* 0.0048 Tc 0.0782 Tw (equal value. The value that is received and sacrificed would be in the) TjT* 0.0059 Tc 6.2433 Tw (form of assets, services, extinguishment of liabilities, or a) TjETendstreamendobj69 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj70 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (36) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0051 Tc 1.6574 Tw (combination thereof. Examples of reciprocal transfers are sales of) Tj0 -10.08 TD 0.0049 Tc 0.637 Tw (goods and services, the provision of loan funds, and the provision of) TjT* 0.0046 Tc 1.3645 Tw (employee services. An exchange of approximately equal value can) TjT* 0.0053 Tc 0.8305 Tw (occur despite differences between the carrying amounts of the assets) TjT* 0.0049 Tc 1.8442 Tw (exchanged, because the parties have obtained mutual benefit. For) TjT* 0.0049 Tc 3.7643 Tw (example, a commercial sale of goods involves an exchange of) TjT* 0.0047 Tc 2.7644 Tw (approximately equal value, irrespective of whether the sale price) TjT* 0.005 Tc 0.0042 Tw (exceeds the cost of the goods to the vendor.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (102) Tj28.8 0 TD 0.0056 Tc 0.6581 Tw (Value is not received in exchange where an entity transfers assets to) Tj0 -10.08 TD 0.0056 Tc 1.0435 Tw (another entity and only derives benefit from satisfying its objectives) TjT* 0.0047 Tc 2.1426 Tw (of providing benefits to others. Accordingly, for a transfer to be) TjT* 0.0056 Tc 2.8302 Tw (reciprocal, it is not sufficient that the transferor receives benefit) TjT* 0.0053 Tc 4.4111 Tw (indirectly as a result of the transfer. For example, when a) TjT* 0.0047 Tc 2.1378 Tw (government provides a grant to a not-for-profit entity, typically it) TjT* 0.0054 Tc 0.0692 Tw (does not receive value directly in exchange. In such circ*mstances, it) TjT* 0.0051 Tc 0.1785 Tw (normally would indirectly receive a benefit as a result of the recipient) TjT* 0.0045 Tc 4.8579 Tw (entity deploying the grant in providing goods or services to) TjT* 0.0055 Tc 2.0265 Tw (beneficiaries which the grantor government represents. Similarly,) TjT* 0.0047 Tc 0.2663 Tw (governments are not obliged to provide benefits, in the form of goods) TjT* 0.0044 Tc 1.5167 Tw (or services, to particular taxpayers or ratepayers in return for their) TjT* 0.0054 Tc 0.0037 Tw (taxes and rates.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (103) Tj28.8 0 TD 0.0054 Tc 0.2678 Tw (Because an essential feature of reciprocal transfers is the exchange of) Tj0 -10.08 TD 0.0046 Tc 3.6345 Tw (approximately equal value by the transferor and the transferee,) TjT* 0.005 Tc 1.3541 Tw (involuntary transfers to not-for-profit entities $such as taxes$ would) TjT* 0.0053 Tc 0.6438 Tw (generally be classified as non-reciprocal transfers. That is, although) TjT* 0.0053 Tc 1.7371 Tw (involuntary transfers will normally result in the provision of some) TjT* 0.0051 Tc 4.2173 Tw (goods or services to the transferors, because the transfers are) TjT* 0.0043 Tc 0.3048 Tw (involuntary, receipt and sacrifice of approximately equal value would) TjT* 0.0048 Tc 3.5243 Tw (occur only by coincidence. For example, governments are not) TjT* 0.0046 Tc 1.5885 Tw (obliged to provide commensurate benefits, in the form of goods or) TjT* 0.0046 Tc 2.4579 Tw (services, to particular taxpayers or ratepayers in return for levies) TjT* 0.0057 Tc 0.0035 Tw (imposed on them.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (104) Tj28.8 0 TD 0.0049 Tc 1.0296 Tw (If assets are provided to a not-for-profit entity on the condition that) Tj0 -10.08 TD 0.0054 Tc 0.9855 Tw (the entity is to make a reciprocal transfer of economic benefits, and) TjT* 0.0045 Tc 1.0846 Tw (that reciprocal transfer has not occurred prior to the reporting date,) TjT* 0.0057 Tc 2.1034 Tw (the recipient entity will have a liability. An example is where a) TjT* 0.0047 Tc 1.3044 Tw (payment is made to a local government in advance for repairs to a) TjT* 0.0044 Tc 2.0688 Tw (private road, where the charge would be repayable directly to the) TjT* 0.0038 Tc 0.0053 Tw (provider or providers if the works were not performed.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (105) Tj28.8 0 TD 0.0055 Tc 5.8837 Tw (A transfer of economic benefits may comprise two distinct) Tj0 -10.08 TD 0.005 Tc 0.6707 Tw (transactions, which are reciprocal and non-reciprocal in nature. For) TjT* 0.005 Tc 0.5579 Tw (example, if a donor transfers a building to an entity at a price which) TjT* 0.006 Tc 0.9151 Tw (intentionally is significantly lower than its fair value, the transfer is) TjETendstreamendobj71 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj72 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (37) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0046 Tc 1.9965 Tw (in part reciprocal $to the extent that approximately equal value is) Tj0 -10.08 TD 0.005 Tc 5.0975 Tw (received in exchange$ and in part non-reciprocal. In these) TjT* 0.0053 Tc 3.6038 Tw (circ*mstances, because a reciprocal transaction is involved, any) TjT* 0.0048 Tc 3.4843 Tw (unsatisfied obligation to provide consideration in return for the) TjT* 0.0052 Tc 0.0039 Tw (building will represent a liability of the recipient of the building.) Tj28.8 -20.16 TD /F2 10.08 Tf0.0046 Tc 0.0045 Tw (Fiduciary responsibility) TjET199.68 587.04 97.44 0.48 re fBT142.08 568.56 TD/F0 10.08 Tf0 Tc 0 Tw (106) Tj28.8 0 TD 0.0051 Tc 0.5107 Tw (The receipt of contributions imposes a fiduciary responsibility on the) Tj0 -10.08 TD 0.0045 Tc 1.3726 Tw (management or governing body of a not-for-profit entity to use the) TjT* 0.0054 Tc 6.0037 Tw (contributed assets efficiently and effectively in pursuing the) TjT* 0.0055 Tc 4.0836 Tw (objectives of the entity. However, this fiduciary responsibility) TjT* 0.0061 Tc 0.2061 Tw (pertains to all of the entity's assets, not only those in respect of which) TjT* 0.0051 Tc 1.204 Tw (there are contributor-imposed restrictions, and does not constitute a) TjT* 0.0056 Tc 0.3155 Tw (legal, equitable or constructive obligation in the sense in which those) TjT* 0.0042 Tc 2.6689 Tw (concepts are discussed in paragraphs 54 to 57. A not-for-profit) TjT* 0.0049 Tc 2.1642 Tw (entity's fiduciary responsibility to use assets to provide goods and) TjT* 0.0056 Tc 1.5396 Tw (services to consumers and beneficiaries does not, of itself, create a) TjT* 0.0055 Tc 1.1557 Tw (duty or responsibility on the entity to sacrifice economic benefits to) TjT* 0.0047 Tc 0.0044 Tw (particular external parties.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (107) Tj28.8 0 TD 0.0049 Tc 4.3242 Tw (The concepts of equitable and constructive obligations have a) Tj0 -10.08 TD 0.005 Tc 4.3961 Tw (relatively narrow area of application. To assess all or most) TjT* 0.005 Tc 0.2042 Tw (contributor-restricted contributions to not-for-profit entities as having) TjT* 0.0057 Tc 0.1368 Tw (the essential characteristics of liabilities is too broad an interpretation) TjT* 0.0058 Tc 2.9554 Tw (of the definition of liabilities. An analogy is sometimes drawn) TjT* 0.0056 Tc 1.0595 Tw (between the obligation of an entity to sacrifice economic benefits to) TjT* 0.0046 Tc 3.0372 Tw (another entity in return for a prepayment received as part of a) TjT* 0.0046 Tc 0.4845 Tw (reciprocal transaction, and the fiduciary obligation of a not-for-profit) TjT* 0.0048 Tc 1.0124 Tw (entity to deploy restricted contributions in the provision of goods or) TjT* 0.0051 Tc 2.2707 Tw (services to beneficiaries in the future. However, because not-for-) TjT* 0.0054 Tc 0.6364 Tw (profit entities have a fiduciary responsibility to use all of their assets) TjT* 0.005 Tc 1.1321 Tw (for the provision of goods and services to beneficiaries, if restricted) TjT* 0.0055 Tc 2.5957 Tw (contributions were to be identified as giving rise to liabilities, it) TjT* 0.0052 Tc 0.4239 Tw (would be consistent for liabilities to be recognised in respect of all of) TjT* 0.0053 Tc 0.2238 Tw (the assets of a not-for-profit entity, in which case equity would not be) TjT* 0.005 Tc 0 Tw (recognised.) Tj-28.8 -20.16 TD 0 Tc (108) Tj28.8 0 TD 0.0049 Tc 1.4175 Tw (Notwithstanding the discussion in paragraphs 98 to 107, a liability) Tj0 -10.08 TD 0.0045 Tc 1.8446 Tw (would arise in respect of contributions received by a not-for-profit) TjT* 0.0055 Tc 0.297 Tw (entity from donors, members, governments or others where the entity) TjT* 0.0056 Tc 0.8436 Tw (has failed to meet the specific conditions attaching to a contribution) TjT* 0.0058 Tc 0.1034 Tw (and the amount must be repaid. In these circ*mstances the entity has) TjT* 0.0051 Tc 0.6897 Tw (a present obligation to a creditor that has arisen as a result of a past) TjT* 0.0057 Tc 2.2725 Tw (event, namely the failure of the entity to meet the conditions for) TjT* 0.0055 Tc 0.0036 Tw (retention of the contribution.) TjETendstreamendobj73 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj74 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (38) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) TjETendstreamendobj75 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj76 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (39) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.32 TD /F2 10.08 Tf0.0024 Tc 0 Tw (PERFORMANCE) Tj0 -20.16 TD 0.003 Tc 0.0061 Tw (Revenues and Expenses) TjET142.08 627.36 96.24 0.48 re fBT142.08 608.88 TD/F0 10.08 Tf0 Tc 0 Tw (109) Tj28.8 0 TD 0.0052 Tc 2.7939 Tw (Statement of Accounting Concepts SAC 2 "Objective of General) Tj0 -10.08 TD 0.0054 Tc 1.1438 Tw (Purpose Financial Reporting" states that aspects of the performance) TjT* 0.0057 Tc 1.5634 Tw (of an entity can be measured in financial and non-financial terms.) TjT* 0.0051 Tc 0.3773 Tw (Information about changes in the entity's equity which have occurred) TjT* 0.005 Tc 1.3241 Tw (during the reporting period, and the extent to which those changes) TjT* 0.0052 Tc 0.2003 Tw (resulted from the entity's operations for that period, is useful to users.) TjT* 0.006 Tc 2.1151 Tw (The latter information is relevant to an assessment of the entity's) TjT* 0.0045 Tc 1.7532 Tw (financial performance during the reporting period. SAC) Tj241.92 0 TD 0 Tc 0.0091 Tw ( 2) Tj0.006 Tc 1.9232 Tw ( defines) Tj-241.92 -10.08 TD 0.0047 Tc 2.5377 Tw (performance as the proficiency of a reporting entity in acquiring) Tj0 -10.08 TD 0.0052 Tc 3.1582 Tw (resources economically and using those resources efficiently and) TjT* 0.0054 Tc 1.3837 Tw (effectively in achieving specified objectives. The primary financial) TjT* 0.0048 Tc 2.1643 Tw (measures of an entity's performance are reported in the operating) TjT* 0.006 Tc 0.0031 Tw (statement, the elements of which are revenues and expenses.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (110) Tj28.8 0 TD 0.0055 Tc 0.4537 Tw (In assessing the performance of profit-seeking entities, revenues may) Tj0 -10.08 TD 0.0043 Tc 0.9648 Tw (be related to expenses incurred during the reporting period, and the) TjT* 0.0051 Tc 0.084 Tw (net result may be evaluated by reference to the assets employed by the) TjT* 0.0055 Tc 2.7636 Tw (entity to achieve the result. In respect of not-for-profit entities,) TjT* 0.0052 Tc 1.4003 Tw (reporting of expenses enables users to assess the cost of goods and) TjT* 0.0044 Tc 3.0181 Tw (services provided by the entity during the reporting period, and) TjT* 0.0056 Tc 0.7672 Tw (reporting of revenues enables users to assess the extent to which the) TjT* 0.0047 Tc 0.3972 Tw (cost of providing goods and services has been recovered by the entity) TjT* 0.0039 Tc 0.0053 Tw (during the reporting period.) Tj0 -30.24 TD /F2 10.08 Tf0.0038 Tc 0.0054 Tw (Definition of Revenues) TjET170.88 355.2 92.64 0.48 re fBT142.08 336.72 TD/F0 10.08 Tf0 Tc 0 Tw (111) Tj28.8 0 TD /F1 10.08 Tf0.0048 Tc 2.7043 Tw ("Revenues" are inflows or other enhancements, or savings in) Tj0 -10.08 TD 0.0049 Tc 1.1802 Tw (outflows, of future economic benefits in the form of increases in) TjT* 0.005 Tc 1.6601 Tw (assets or reductions in liabilities of the entity, other than those) TjT* 0.0048 Tc 0.9403 Tw (relating to contributions by owners, that result in an increase in) TjT* 0.0048 Tc 0.0043 Tw (equity during the reporting period.) Tj150.72 3.12 TD /F0 7.92 Tf0.12 Tc 0 Tw (1) Tj-179.52 -66.96 TD /F0 10.08 Tf0 Tc 0.0091 Tw ( ) Tj79.2 0 TD ( ) TjET142.08 234.72 144 0.48 re fBT142.08 227.28 TD/F0 7.92 Tf0.12 Tc 0 Tw (1) Tj14.4 -3.12 TD -0.0746 Tc 0.8554 Tw (The definition has been structured so as to be applicable to a range of measurement models.) Tj0 -7.92 TD -0.1017 Tc -0.0454 Tw (Accordingly, in interpreting the definition in a given set of circ*mstances, it is important to have) TjT* -0.075 Tc 1.6632 Tw (in mind the particular measurement model which would apply. Paragraphs 129 and 148) TjT* -0.0983 Tc 2.3712 Tw (contain discussion of the impact of different measurement models on the definition and) TjT* -0.0802 Tc -0.0669 Tw (recognition of revenues.) TjETendstreamendobj77 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj78 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (40) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD /F2 10.08 Tf0.0047 Tc 0.0044 Tw (Characteristics of Revenues) TjET170.88 647.52 113.76 0.48 re fBT142.08 629.04 TD/F0 10.08 Tf0 Tc 0 Tw (112) Tj28.8 0 TD 0.0058 Tc 1.0833 Tw (The definition of revenues set out in this Statement is linked to the) Tj0 -10.08 TD 0.0055 Tc 1.7636 Tw (definitions of assets and liabilities, focusing upon gross inflows or) TjT* 0.0056 Tc 3.5135 Tw (other enhancements of future economic benefits and savings in) TjT* 0.005 Tc 3.5141 Tw (outflows of future economic benefits which would otherwise be) TjT* 0.0054 Tc 0.0037 Tw (required to satisfy liabilities.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (113) Tj28.8 0 TD 0.0054 Tc 1.8171 Tw (The inflows or other enhancements of future economic benefits or) Tj0 -10.08 TD 0.0055 Tc 4.0536 Tw (savings in outflows of future economic benefits that constitute) TjT* 0.0048 Tc 0.1043 Tw (revenues may be of various kinds. For example, revenues in the form) TjT* 0.0055 Tc 2.057 Tw (of inflows or other enhancements of future economic benefits can) TjT* 0.005 Tc 1.6601 Tw (arise from the entity providing goods and services, investing in or) TjT* 0.0053 Tc 2.5718 Tw (lending to another entity, holding and disposing of assets, or by) TjT* 0.0053 Tc 4.0153 Tw (receiving contributions such as grants, donations and bequests.) TjT* 0.0052 Tc 2.6919 Tw (Revenues in the form of savings in outflows of future economic) TjT* 0.0053 Tc 1.0511 Tw (benefits can arise where inflows of assets are foregone in return for) TjT* 0.0055 Tc 0.3636 Tw (extinguishment of liabilities, where liabilities are forgiven and where) TjT* 0.0053 Tc 0.0758 Tw (exchange gains arise on translation of loans denominated in a foreign) TjT* 0.0053 Tc 1.7905 Tw (currency. The transactions and other events from which revenues) TjT* 0.0056 Tc 3.1236 Tw (arise, and the revenues themselves, are in many forms and are) TjT* 0.0046 Tc 2.0686 Tw (referred to by a variety of names; for example, output, deliveries,) TjT* 0.0062 Tc 0.6929 Tw (sales, fees, commissions, interest, dividends, royalties, rent and non-) TjT* 0.0053 Tc 0.0038 Tw (reciprocal transfers such as taxes, grants and rates.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (114) Tj28.8 0 TD 0.0048 Tc 0.69 Tw (For a transaction or other event to give rise to revenue as a result of) Tj0 -10.08 TD 0.0062 Tc 0.503 Tw (an increase in assets it is necessary that the entity controls the future) TjT* 0.0054 Tc 1.4197 Tw (economic benefits arising from the transaction or other event. For) TjT* 0.0047 Tc 0.5062 Tw (example, where the entity has provided goods and services as part of) TjT* 0.0048 Tc 2.4644 Tw (reciprocal transactions during the reporting period, it has control) TjT* 0.0052 Tc 2.0039 Tw (over the future economic benefits arising from the transactions or) TjT* 0.0057 Tc 3.4834 Tw (other events because it either has an explicit claim against an) TjT* 0.0052 Tc 0.124 Tw (external party or has received an inflow of cash. Revenues arise once) TjT* 0.0048 Tc 0.0576 Tw (control over the future economic benefits has been achieved, provided) TjT* 0.006 Tc 0.0686 Tw (that there has not been an equivalent increase in liabilities. Revenues) TjT* 0.0048 Tc 0.0643 Tw (will not normally arise before the provision of goods or services by an) TjT* 0.0053 Tc 0.7958 Tw (entity as part of a reciprocal transaction, because the entity typically) TjT* 0.0054 Tc 2.3383 Tw (will not have established a claim against an external party. For) TjT* 0.0053 Tc 2.4999 Tw (example, where an entity provides services in the form of rental) TjT* 0.0055 Tc 0.9199 Tw (property, revenues will not arise until the entity has a claim against) TjT* 0.0055 Tc 1.1113 Tw (the tenant for rent in respect of the property. This claim will arise) TjT* 0.0055 Tc 1.88 Tw (progressively as the tenant uses the rental property. If the tenant) TjT* 0.0054 Tc 3.4171 Tw (prepays rent, the increase in future economic benefits does not) TjT* 0.0056 Tc 0.3035 Tw (constitute an item of revenue. This is because even though the entity) TjT* 0.0053 Tc 2.5478 Tw (has control over the cash received, there has been an equivalent) TjT* 0.0051 Tc 2.044 Tw (liability established in the form of an obligation to provide rental) TjETendstreamendobj79 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj80 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (41) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0053 Tc 0.3311 Tw (services over the period of the rental prepayment, with the result that) Tj0 -10.08 TD 0.0057 Tc 0.0034 Tw (there has been no increase in equity.) Tj0 -20.16 TD /F2 10.08 Tf0.0038 Tc 0.0053 Tw (Savings in outflows of future economic benefits) TjET170.88 617.28 191.52 0.48 re fBT142.08 598.8 TD/F0 10.08 Tf0 Tc 0 Tw (115) Tj28.8 0 TD 0.0054 Tc 0.7238 Tw (The definition of revenues includes savings in the outflows o) Tj252.48 0 TD 0.0036 Tc 0.7256 Tw (f future) Tj-252.48 -10.08 TD 0.0052 Tc 3.3939 Tw (economic benefits which would otherwise be required to satisfy) Tj0 -10.08 TD 0.0053 Tc 0.4598 Tw (liabilities. Where the savings in outflows depend upon the provision) TjT* 0.0053 Tc 0.6438 Tw (of goods or services by the entity, revenues arise in the same pattern) TjT* 0.0057 Tc 0.6496 Tw (as if there were an inflow of cash or the establishment of an explicit) TjT* 0.0058 Tc 0.0833 Tw (claim against an external party, that is, in a pattern which reflects the) TjT* 0.0052 Tc 0.004 Tw (entity's economic activity in providing the goods or services.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (116) Tj28.8 0 TD 0.0058 Tc 3.6753 Tw (In the case of the forgiveness of liabilities, the revenues arise) Tj0 -10.08 TD 0.006 Tc 2.0191 Tw (simultaneously with that forgiveness. In a situation in which the) TjT* -0.0082 Tc 0.0573 Tw (provider of debt finance is part of the ownership group \226 for example,) TjT* -0.0084 Tc 3.1593 Tw (a government in relation to one of its statutory authorities \226 a) TjT* 0.0053 Tc 0.1638 Tw (question may arise as to whether the forgiveness of debts gives rise to) TjT* 0.005 Tc 4.4201 Tw (revenues. Some may argue that the debts should simply be) TjT* 0.0055 Tc 1.2516 Tw (reclassified as equity, with no recognition of revenues, on the basis) TjT* 0.0048 Tc 2.1403 Tw (that the forgiveness of debt is consideration for the debt provider) TjT* 0.0064 Tc 1.8427 Tw (obtaining a financial interest in the net assets of the entity. This) TjT* 0.0053 Tc 1.2038 Tw (should be a question of fact for most entities. If the forgiveness of) TjT* -0.0076 Tc 0.3768 Tw (debt represents a contribution by owners \226 for example, as a result of) TjT* -0.0078 Tc 0.5969 Tw (the acquisition of ordinary shares by the debt provider \226 it should be) TjT* 0.0054 Tc 0.5055 Tw (identified as a contribution of equity. In all other circ*mstances, the) TjT* 0.005 Tc 0.0041 Tw (forgiveness of debt should be identified as an item of revenue.) Tj0 -30.24 TD /F2 10.08 Tf0.0041 Tc 0.0051 Tw (Definition of Expenses) TjET170.88 355.2 91.92 0.48 re fBT142.08 336.72 TD/F0 10.08 Tf0 Tc 0 Tw (117) Tj28.8 0 TD /F1 10.08 Tf0.0052 Tc 4.9068 Tw ("Expenses" are consumptions or losses of future economic) Tj0 -10.08 TD 0.0052 Tc 3.7239 Tw (benefits in the form of reductions in assets or increases in) TjT* 0.0049 Tc 1.1242 Tw (liabilities of the entity, other than those relating to distributions) TjT* 0.0047 Tc 0.2008 Tw (to owners, that result in a decrease in equity during the reporting) TjT* 0.0055 Tc 0 Tw (period.) Tj0 -30.24 TD /F2 10.08 Tf0.005 Tc 0.0042 Tw (Characteristics of Expenses) TjET170.88 264.48 113.04 0.48 re fBT142.08 246 TD/F0 10.08 Tf0 Tc 0 Tw (118) Tj28.8 0 TD 0.0051 Tc 4.4269 Tw (Expenses represent consumptions or losses of future economic) Tj0 -10.08 TD 0.0054 Tc 0.3237 Tw (benefits that result from transactions undertaken by, and other events) TjT* 0.0049 Tc 1.5509 Tw (affecting, the entity during the reporting period. Consumptions or) TjT* 0.0052 Tc 0.7457 Tw (losses of future economic benefits occur in the form of reductions in) TjT* 0.0065 Tc 0.0026 Tw (assets or increases in liabilities.) TjETendstreamendobj81 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj82 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (42) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.32 TD 0 Tc 0 Tw (119) Tj28.8 0 TD 0.005 Tc 5.0441 Tw (The consu) Tj46.8 0 TD 0.0055 Tc 5.0779 Tw (mptions or losses of future economic benefits that) Tj-46.8 -10.08 TD 0.0047 Tc 2.5911 Tw (constitute expenses may be of various kinds; for example, future) Tj0 -10.08 TD 0.0049 Tc 0.3642 Tw (economic benefits will be consumed or will expire during the current) TjT* 0.0048 Tc 0.7462 Tw (reporting period as consumable stores are used, and there will be an) TjT* 0.0044 Tc 0.7902 Tw (outflow of future economic benefits in a future reporting period as a) TjT* 0.0045 Tc 2.1406 Tw (result of the incurrence, during the current reporting period, of a) TjT* 0.005 Tc 1.1561 Tw (liability for property taxes. The transactions and other events from) TjT* 0.006 Tc 2.5897 Tw (which expenses arise, and the expenses themselves, are in many) TjT* 0.0045 Tc 0.8247 Tw (forms and are referred to by a variety of names; for example, wages) TjT* 0.0051 Tc 0.004 Tw (and salaries, depreciation and amortisation, cost of goods sold, cost of) TjT* 0.0052 Tc 0.004 Tw (services provided, rent and interest.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (120) Tj28.8 0 TD 0.0052 Tc 2.4519 Tw (Most expenses result from the use of assets during the reporting) Tj0 -10.08 TD 0.0054 Tc 2.6437 Tw (period. In many cases, the acquisition and use of assets occurs) TjT* 0.0046 Tc 0.3778 Tw (simultaneously or during the same reporting period; for example, the) TjT* 0.0051 Tc 1.8174 Tw (consumption of future economic benefits resulting from the use of) TjT* 0.0054 Tc 0.7238 Tw (employees' services, power supplies, telecommunication services and) TjT* 0.0049 Tc 0.6588 Tw (property insurance. Where the entity incurs an obligation to pay for) TjT* 0.0057 Tc 0.3726 Tw (these items in the future, rather than paying for them on receipt, it is) TjT* 0.0053 Tc 1.4172 Tw (common practice to recognise only the incurrence of liabilities and) TjT* 0.0056 Tc 1.0355 Tw (expenses, rather than to first recognise the acquisition of assets and) TjT* 0.0055 Tc 1.8036 Tw (the incurrence of liabilities and then to recognise the reduction in) TjT* 0.0058 Tc 2.6673 Tw (assets and the incurrence of expenses. In some cases, however,) TjT* 0.0053 Tc 4.7438 Tw (expenses result directly from the incurrence of liabilities; for) TjT* 0.0053 Tc 0.1538 Tw (example, income tax. These transactions are non-reciprocal transfers) TjT* 0.0051 Tc 1.2641 Tw (and an expense is identified on the basis of an expected outflow of) TjT* 0.005 Tc 0.0041 Tw (future economic benefits in order to satisfy the obligation incurred.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (121) Tj28.8 0 TD 0.0055 Tc 0.7236 Tw (In some cases, the reduction in future economic benefits which gave) Tj0 -10.08 TD 0.0045 Tc 3.5086 Tw (rise to an expense during the reporting period may have been) TjT* 0.0055 Tc 2.5237 Tw (initiated by the entity with the objective of causing a concurrent) TjT* 0.0056 Tc 0.5235 Tw (increase in future economic benefits in the form of an asset, but may) TjT* 0.0051 Tc 4.5422 Tw (have failed to do so. For example, where an entity makes) TjT* 0.0044 Tc 0.618 Tw (expenditures as part of a research and development programme with) TjT* 0.0052 Tc 0.7239 Tw (the objective of generating future economic benefits in the form of a) TjT* 0.0046 Tc 1.1645 Tw (new product or process, and the expenditures fail to give rise to an) TjT* 0.0052 Tc 0.9639 Tw (asset that qualifies for recognition, the expenditures would meet the) TjT* 0.0057 Tc 0.0035 Tw (definition of expenses.) Tj0 -30.24 TD /F2 10.08 Tf0.004 Tc 0.0051 Tw (Revenues and Expenses: Essential Characteristic of Changes in) TjET170.88 244.32 259.68 0.48 re fBT170.88 235.92 TD0.0031 Tc 0 Tw (Equity) TjET170.88 234.24 26.4 0.48 re fBT142.08 215.76 TD/F0 10.08 Tf0 Tc (122) Tj28.8 0 TD 0.0047 Tc 2.5337 Tw (For a transaction or other event to give rise to a revenue or an) Tj0 -10.08 TD 0.0059 Tc 0.6432 Tw (expense, it must ) Tj71.04 0 TD /F2 10.08 Tf0.0047 Tc 0.9644 Tw (inter alia) Tj38.64 0 TD /F0 10.08 Tf0.0049 Tc 1.0671 Tw ( have the effect of increasing or reducing) Tj-109.68 -10.08 TD 0.0051 Tc 0.0694 Tw (equity. Where such an effect occurs, the resultant revenue or expense) Tj0 -10.08 TD 0.0053 Tc 1.0171 Tw (would be identified respectively as the inflow or other enhancement) TjETendstreamendobj83 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj84 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (43) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0051 Tc 5.5507 Tw (or saving in outflows of future economic benefits, and the) Tj0 -10.08 TD 0.0054 Tc 2.2357 Tw (consumption or loss of future economic benefits. An increase in) TjT* 0.005 Tc 0.9908 Tw (assets resulting from raising debt would neither increase nor reduce) TjT* 0.0058 Tc 0.4113 Tw (equity since there will have been an equivalent increase in liabilities,) TjT* 0.0049 Tc 0.5042 Tw (and the transaction would not, therefore, give rise to a revenue or an) TjT* 0.0053 Tc 0.5639 Tw (expense. Similarly, the purchase of depreciable assets would neither) TjT* 0.0046 Tc 1.6191 Tw (increase nor reduce equity and would not, therefore, give rise to a) TjT* 0.0048 Tc 0.6806 Tw (revenue or an expense. The purchase of depreciable assets will give) TjT* 0.0047 Tc 1.5644 Tw (rise to expenses in future reporting periods as the future economic) TjT* 0.0052 Tc 0.0039 Tw (benefits embodied in the assets are consumed or expire.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (123) Tj28.8 0 TD 0.0051 Tc 5.284 Tw (Non-reciprocal transfers of future economic benefits, such as) Tj0 -10.08 TD 0.0051 Tc 2.6741 Tw (donations, represent expenses and revenues of the transferor and) TjT* 0.0052 Tc 2.644 Tw (transferee respectively. The transferor sacrifices future economic) TjT* 0.0057 Tc 0.4649 Tw (benefits in the form of a reduction in assets that results in a decrease) TjT* 0.0053 Tc 0.5392 Tw (in equity. Receipt of the transfer by the transferee does not give rise) TjT* 0.0056 Tc 2.1635 Tw (to a liability of that entity, and therefore constitutes an inflow of) TjT* 0.0058 Tc 1.9887 Tw (future economic benefits in the form of an increase in assets that) TjT* 0.0052 Tc 3.5079 Tw (results in an increase in equity. The nature of non-reciprocal) TjT* 0.0047 Tc 1.5535 Tw (transfers is discussed in paragraphs 100 to 105. The collection of) TjT* 0.0051 Tc 0.3241 Tw (cash from debtors does not of itself give rise to revenues or expenses.) TjT* 0.0048 Tc 0.751 Tw (Where the amounts collected from debtors differ from their carrying) TjT* 0.0054 Tc 2.1037 Tw (amounts prior to collection, the difference between those amounts) TjT* 0.0052 Tc 2.0766 Tw (constitutes a revenue or an expense arising from a change in the) TjT* 0.005 Tc 0.2441 Tw (future economic benefits embodied in the debtors, and does not result) TjT* 0.0055 Tc 0.0036 Tw (from the exchange of the obligations to the entity for cash.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (124) Tj28.8 0 TD 0.005 Tc 0.4405 Tw (Certain increases in equity and reductions in equity do not qualify as) Tj0 -10.08 TD 0.0052 Tc 6.1539 Tw (revenues or expenses. These include those resulting from) TjT* 0.0052 Tc 3.7239 Tw (contributions by owners and distributions to owners, and those) TjT* 0.0047 Tc 6.3344 Tw (occurring under certain accounting models in the form of) TjT* 0.0051 Tc 2.2669 Tw (measurement adjustments, which are discussed in paragraphs 147) TjT* 0.003 Tc 0.0061 Tw (and 148.) Tj0 -30.24 TD /F2 10.08 Tf0.0041 Tc 0.005 Tw (Criteria for Recognition of Revenues) TjET170.88 294.72 150.24 0.48 re fBT142.08 276.24 TD/F0 10.08 Tf0 Tc 0 Tw (125) Tj28.8 0 TD /F1 10.08 Tf0.0048 Tc 0.2443 Tw (A revenue should be recognised in the operating statement, in the) Tj0 -10.08 TD 0.0046 Tc 1.7912 Tw (determination of the result for the reporting period, when and) TjT* 0.0042 Tc 0.0049 Tw (only when:) Tj0 -20.16 TD 0.0022 Tc 0 Tw ($a$) Tj28.8 0 TD 0.0044 Tc 2.5914 Tw (it is probable that the inflow or other enhancement or) Tj0 -10.08 TD 0.0048 Tc 6.0386 Tw (saving in outflows of future economic benefits has) TjT* 0.0043 Tc 0.0048 Tw (occurred; and) Tj-28.8 -20.16 TD 0.0043 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0043 Tc 1.4181 Tw (the inflow or other enhancement or saving in outflows of) Tj0 -10.08 TD 0.0049 Tc 0.0043 Tw (future economic benefits can be measured reliably.) TjETendstreamendobj85 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj86 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (44) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD /F2 10.08 Tf0.0035 Tc 0.0056 Tw (Probable inflow or other enhancement or saving in outflows of future) TjET170.88 647.52 281.52 0.48 re fBT170.88 639.12 TD0.0038 Tc 0.0053 Tw (economic benefits) TjET170.88 637.44 72.96 0.48 re fBT142.08 618.96 TD/F0 10.08 Tf0 Tc 0 Tw (126) Tj28.8 0 TD 0.0046 Tc 0.6445 Tw (For a revenue to qualify for recognition, it must be probable that the) Tj0 -10.08 TD 0.005 Tc 4.5641 Tw (inflow or other enhancement or saving in outflows of future) TjT* 0.0053 Tc 0.3638 Tw (economic benefits has occurred. The term "probable" means that the) TjT* 0.0054 Tc 1.0292 Tw (chance of the inflow or other enhancement or saving in outflows of) TjT* 0.0049 Tc 1.1242 Tw (future economic benefits having occurred is more likely rather than) TjT* 0.0066 Tc 0.0025 Tw (less likely.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (127) Tj28.8 0 TD 0.0033 Tc 0.7259 Tw (The probabi) Tj49.68 0 TD 0.0058 Tc 0.7234 Tw (lity of such inflows or other enhancements or savings in) Tj-49.68 -10.08 TD 0.0056 Tc 1.2995 Tw (outflows of future economic benefits will vary. Assessments of the) Tj0 -10.08 TD 0.0054 Tc 0.3878 Tw (degree of certainty attaching to the inflows or other enhancements or) TjT* 0.0051 Tc 2.5107 Tw (savings in outflows of future economic benefits in any particular) TjT* 0.0051 Tc 2.0549 Tw (situation should be made on the basis of available evidence. For) TjT* 0.0055 Tc 0.4596 Tw (many entities, the majority of revenues will result from the provision) TjT* 0.0041 Tc 2.813 Tw (of goods and services during the reporting period and the large) TjT* 0.0053 Tc 2.6139 Tw (majority of underlying transactions and other events will involve) TjT* 0.0055 Tc 0.1782 Tw (little or no uncertainty that an inflow or other enhancement or saving) TjT* 0.0054 Tc 0.4837 Tw (in outflows of future economic benefits has occurred, since the entity) TjT* 0.0054 Tc 1.4219 Tw (will either have received cash or have an explicit claim against an) TjT* 0.0052 Tc 0.4359 Tw (external party. However, an absence of an exchange transaction will) TjT* 0.0049 Tc 0.5082 Tw (often raise doubts about whether the requisite degree of certainty has) TjT* 0.0056 Tc 2.3555 Tw (been attained. In situations where there is uncertainty about the) TjT* 0.005 Tc 4.5641 Tw (inflow or other enhancement or saving in outflows of future) TjT* 0.0053 Tc 3.1505 Tw (economic benefits and the other criterion for the recognition of) TjT* 0.0051 Tc 0.084 Tw (revenues is satisfied, revenues would qualify for recognition when the) TjT* 0.0052 Tc 0.004 Tw (inflow or other enhancement or saving in outflows is probable.) Tj0 -20.16 TD /F2 10.08 Tf0.0039 Tc 0.0053 Tw (Reliable measurement) TjET170.88 355.2 90.24 0.48 re fBT142.08 336.72 TD/F0 10.08 Tf0 Tc 0 Tw (128) Tj28.8 0 TD 0.005 Tc 0.7841 Tw (For an item of revenue to qualify for recognition it is also necessary) Tj0 -10.08 TD 0.0052 Tc 0.7021 Tw (that the inflow or other enhancement or saving in outflows of future) TjT* 0.0057 Tc 0.1344 Tw (economic benefits can be measured reliably. In most cases the inflow) TjT* 0.005 Tc 3.1508 Tw (or other enhancement or saving in outflows of future economic) TjT* 0.0053 Tc 1.1799 Tw (benefits will be clearly evident and will be capable of measurement) TjT* 0.0055 Tc 0.6036 Tw (with a high degree of reliability. However, in some cases the inflow) TjT* 0.005 Tc 3.1508 Tw (or other enhancement or saving in outflows of future economic) TjT* 0.0057 Tc 0.5707 Tw (benefits will be the subject of estimates. For example, in accounting) TjT* 0.0052 Tc 0.4306 Tw (for construction contracts the stage of contract completion and/or the) TjT* 0.0051 Tc 4.164 Tw (amount of revenues that will ultimately be recognised can be) TjT* 0.0053 Tc 1.182 Tw (uncertain and would need to be estimated. In such cases, revenues) TjT* 0.005 Tc 0.1241 Tw (would qualify for recognition only if the inflow or other enhancement) TjT* 0.0049 Tc 1.5403 Tw (or saving in outflows of future economic benefits can be measured) TjT* 0.0053 Tc 0 Tw (reliably.) TjETendstreamendobj87 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj88 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (45) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD /F2 10.08 Tf0.0031 Tc 0.0061 Tw (Impact of the measurement model adopted) TjET170.88 647.52 172.56 0.48 re fBT142.08 629.04 TD/F0 10.08 Tf0 Tc 0 Tw (129) Tj28.8 0 TD 0.0047 Tc 3.0344 Tw (The measurement model adopted and its underlying concepts of) Tj0 -10.08 TD 0.0055 Tc 2.3316 Tw (capital and capital maintenance are relevant to the timing of the) TjT* 0.0052 Tc 1.7079 Tw (recognition of revenues. For example, in an historical cost model) TjT* 0.0057 Tc 1.6434 Tw (assets are measured in terms of the nominal dollars that it cost to) TjT* 0.0055 Tc 5.0779 Tw (acquire the future economic benefits comprising those assets.) TjT* 0.0053 Tc 3.1478 Tw (Although an increase in the value of assets held, measured for) TjT* 0.0047 Tc 0.3884 Tw (example by reference to market selling prices, could be considered to) TjT* 0.0054 Tc 0.3337 Tw (represent an enhancement of future economic benefits and, therefore,) TjT* 0.0054 Tc 0.811 Tw (an item of revenue, the increase in value is not normally recognised) TjT* 0.0055 Tc 1.6037 Tw (until the assets are sold and there is an inflow of future economic) TjT* 0.0054 Tc 1.9038 Tw (benefits in the form of the proceeds from sale or a claim thereto.) TjT* 0.0057 Tc 0.4616 Tw (This is because the historical cost model is transaction based and the) TjT* 0.0051 Tc 0.1131 Tw (occurrence of a transaction with an external party $a sale$ is normally) TjT* 0.0055 Tc 1.9236 Tw (considered to be a necessary condition for the enhancement in an) TjT* 0.0054 Tc 0.8898 Tw (asset's value to be recognised as an item of revenue. In contrast, in) TjT* 0.0055 Tc 0.7476 Tw (an exit price model, the enhancement of future economic benefits in) TjT* 0.0055 Tc 0.0436 Tw (the form of increased market selling prices of assets held by the entity) TjT* 0.0051 Tc 1.204 Tw (is recognised as prices change. Under that model, revenues do not) TjT* 0.006 Tc 0.1878 Tw (arise upon sale of the assets, as the sales reflect an exchange of assets) TjT* 0.0051 Tc 5.092 Tw (of the same value in terms of command over current cash) TjT* 0.0054 Tc 0.5865 Tw (equivalents. Under some measurement models, recognised increases) TjT* 0.005 Tc 0.8113 Tw (in the value of assets generally would not be recognised as revenues) TjT* 0.0057 Tc 0.8194 Tw (because the increases in value are not identified as enhancements of) TjT* 0.0051 Tc 0.2201 Tw (future economic benefits. Instead, they would be recognised as direct) TjT* 0.0055 Tc 4.4836 Tw (adjustments to the amount of equity. These adjustments are) TjT* 0.0039 Tc 0.0052 Tw (discussed in paragraph 148.) Tj28.8 -20.16 TD /F2 10.08 Tf0.0037 Tc 0.0054 Tw (Transaction-based models for revenue recognition) TjET199.68 355.2 205.2 0.48 re fBT142.08 336.72 TD/F0 10.08 Tf0 Tc 0 Tw (130) Tj28.8 0 TD 0.005 Tc 0.6341 Tw (Under transaction-based accounting models, it would not be possible) Tj0 -10.08 TD 0.0056 Tc 2.4275 Tw (to specify detailed tests which, for any entity, would identify the) TjT* 0.0044 Tc 0.5567 Tw (appropriate point at which revenues from the provision of goods and) TjT* 0.0051 Tc 4.3241 Tw (services should be recognised. However, consideration of the) TjT* 0.0058 Tc 3.5766 Tw (following tests will be useful in many situations in identifying) TjT* 0.0048 Tc 3.791 Tw (whether, for a transaction involving the provision of goods or) TjT* 0.0048 Tc 2.5723 Tw (services, it would be probable that an inflow of future economic) TjT* 0.0047 Tc 1.6604 Tw (benefits will have occurred and will be capable of being measured) TjT* 0.0051 Tc 0 Tw (reliably:) Tj0 -20.16 TD 0.0035 Tc ($a$) Tj28.8 0 TD 0.005 Tc 0.6762 Tw (an agreement for the provision of the goods or services exists) Tj0 -10.08 TD 0.0052 Tc 2.1159 Tw (between the entity and one or more parties external to the) TjT* 0.0067 Tc 0 Tw (entity;) Tj-28.8 -20.16 TD 0.0029 Tc ($b$) Tj28.8 0 TD 0.0058 Tc 1.3778 Tw (cash has been received, or the entity has a claim against an) Tj0 -10.08 TD 0.0047 Tc 0.0044 Tw (external party or parties that:) TjETendstreamendobj89 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj90 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (46) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-103.2 484.32 TD 0.0046 Tc 0 Tw ($i$) Tj36 0 TD 0.0055 Tc 1.1236 Tw (is for a specified consideration, in the form of cash,) Tj0 -10.08 TD 0.0056 Tc 0.3875 Tw (other assets, or a reduction in a liability of the entity;) TjT* 0.004 Tc 0 Tw (and) Tj-36 -20.16 TD 0.0053 Tc ($ii$) Tj36 0 TD 0.0044 Tc 2.3147 Tw (cannot be avoided by the external party or parties) Tj0 -10.08 TD 0.0055 Tc 2.1979 Tw (without the incurrence of a penalty set sufficiently) TjT* 0.0053 Tc 0.0039 Tw (large as, in normal circ*mstances, to deter avoidance;) Tj-64.8 -20.16 TD 0.0042 Tc 0 Tw ($c$) Tj28.8 0 TD 0.0054 Tc 1.8704 Tw (all acts of performance necessary to establish a valid claim) Tj0 -10.08 TD 0.0048 Tc 0.0043 Tw (against the external party or parties have been completed; and) Tj-28.8 -20.16 TD 0.0022 Tc 0 Tw ($d$) Tj28.8 0 TD 0.0056 Tc 0.9636 Tw (it is possible to estimate reliably the collectability of debts or) Tj0 -10.08 TD 0.0048 Tc 0.0043 Tw (the return of the goods sold.) Tj-57.6 -20.16 TD 0 Tc 0 Tw (131) Tj28.8 0 TD 0.0058 Tc 3.0033 Tw (Where all of these tests are met, the definition and recognition) Tj0 -10.08 TD 0.0051 Tc 0.4622 Tw (criteria for revenues will be satisfied, because it will be probable that) TjT* 0.0051 Tc 0.964 Tw (an inflow of future economic benefits has occurred in respect of the) TjT* 0.0052 Tc 0.4039 Tw (entity's acts of performance and because the future economic benefits) TjT* 0.0051 Tc 3.6281 Tw (that have been, or will be, received can be measured reliably.) TjT* 0.0052 Tc 0.2679 Tw (However, there will be situations where the criteria for recognition of) TjT* 0.0049 Tc 1.8151 Tw (revenues will be considered to have been met even though one or) TjT* 0.0051 Tc 0.0041 Tw (more of the tests identified in paragraph 130 have not been satisfied.) Tj0 -30.24 TD /F2 10.08 Tf0.0043 Tc 0.0049 Tw (Criteria for Recognition of Expenses) TjET170.88 405.6 149.52 0.48 re fBT142.08 387.12 TD/F0 10.08 Tf0 Tc 0 Tw (132) Tj28.8 0 TD /F1 10.08 Tf0.0049 Tc 1.4975 Tw (An expense should be recognised in the operating statement, in) Tj0 -10.08 TD 0.0046 Tc 0.0046 Tw (the determination of the result for the reporting period, when and) TjT* 0.0042 Tc 0.0049 Tw (only when:) Tj0 -20.16 TD 0.0022 Tc 0 Tw ($a$) Tj28.8 0 TD 0.005 Tc 3.8708 Tw (it is probable that the consumption or loss of future) Tj0 -10.08 TD 0.0051 Tc 0.754 Tw (economic benefits resulting in a reduction in assets and/or) TjT* 0.005 Tc 0.0041 Tw (an increase in liabilities has occurred; and) Tj-28.8 -20.16 TD 0.0043 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0049 Tc 0.5375 Tw (the consumption or loss of future economic benefits can be) Tj0 -10.08 TD 0.005 Tc 0.0041 Tw (measured reliably.) Tj-28.8 -20.16 TD /F2 10.08 Tf0.0038 Tc 0.0053 Tw (Probable consumption or loss of future economic benefits) TjET170.88 274.56 234.48 0.48 re fBT142.08 256.08 TD/F0 10.08 Tf0 Tc 0 Tw (133) Tj28.8 0 TD 0.0048 Tc 0.1643 Tw (For an expense to qualify for recognition, it must be probable that the) Tj0 -10.08 TD 0.005 Tc 1.1562 Tw (consumption or loss of future economic benefits has occurred. The) TjT* 0.0054 Tc 0.5491 Tw (term "probable" means that the chance of the consumption or loss of) TjT* 0.0049 Tc 1.1242 Tw (future economic benefits having occurred is more likely rather than) TjT* 0.0066 Tc 0.0025 Tw (less likely.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (134) Tj28.8 0 TD 0.0046 Tc 2.9745 Tw (The probability of such consumption or loss of fu) Tj222.72 0 TD 0.0048 Tc 3.1243 Tw (ture economic) Tj-222.72 -10.08 TD 0.0051 Tc 2.644 Tw (benefits will vary. Most expenses result from the production or) TjETendstreamendobj91 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj92 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (47) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0042 Tc 1.613 Tw (delivery of goods and services during the reporting period and the) Tj0 -10.08 TD 0.0051 Tc 2.164 Tw (large majority of these involve little or no uncertainty that future) TjT* 0.005 Tc 1.3908 Tw (economic benefits have been consumed; for example, cost of goods) TjT* 0.005 Tc 1.5508 Tw (sold, cost of employee services, supplies used and equipment used.) TjT* 0.0057 Tc 0.5271 Tw (However, in some cases there will be uncertainty as to whether there) TjT* 0.005 Tc 1.4921 Tw (has been a consumption or loss of future economic benefits during) TjT* 0.0046 Tc 1.7565 Tw (the reporting period; for example, it may be difficult to determine) TjT* 0.0053 Tc 1.3538 Tw (whether the future economic benefits embodied in long-lived assets) TjT* 0.005 Tc 1.2941 Tw (have suffered commercial impairment $in addition to physical wear) TjT* 0.0048 Tc 1.4661 Tw (and tear$ during the reporting period. In situations where there is) TjT* 0.0049 Tc 4.4142 Tw (uncertainty about the consumption or loss of future economic) TjT* 0.0051 Tc 7.1011 Tw (benefits, expenses would qualify for recognition when the) TjT* 0.005 Tc 0.0042 Tw (consumption or loss is probable.) Tj0 -20.16 TD /F2 10.08 Tf0.0039 Tc 0.0053 Tw (Reliable measurement) TjET170.88 506.4 90.24 0.48 re fBT142.08 487.92 TD/F0 10.08 Tf0 Tc 0 Tw (135) Tj28.8 0 TD 0.0053 Tc 0.5638 Tw (For an expense to qualify for recognition it is also necessary that the) Tj0 -10.08 TD 0.005 Tc 2.1641 Tw (consumption or loss of future economic benefits can be measured) TjT* 0.0054 Tc 1.1819 Tw (reliably. In most cases the consumption or loss of future economic) TjT* 0.0053 Tc 1.1799 Tw (benefits will be clearly evident and will be capable of measurement) TjT* 0.0055 Tc 3.2545 Tw (with a high degree of reliability. However, in some cases the) TjT* 0.0053 Tc 0.2875 Tw (consumption or loss of future economic benefits will be the subject of) TjT* 0.0053 Tc 0.6171 Tw (estimates; for example, the expected loss of future economic benefits) TjT* 0.0056 Tc 2.8302 Tw (resulting from outstanding litigation against the entity. In such) TjT* 0.0049 Tc 0.1722 Tw (cases, an expense would qualify for recognition if the consumption or) TjT* 0.0051 Tc 0.004 Tw (loss of future economic benefits can be measured reliably.) Tj0 -20.16 TD /F2 10.08 Tf0.0031 Tc 0.006 Tw (Recognition techniques) TjET170.88 375.36 95.04 0.48 re fBT142.08 356.88 TD/F0 10.08 Tf0 Tc 0 Tw (136) Tj28.8 0 TD 0.0045 Tc 2.2847 Tw (Application of the recognition criteria specified in paragraph 132) Tj0 -10.08 TD 0.0051 Tc 3.2612 Tw (usually involves identifying the consumption of future economic) TjT* 0.0043 Tc 0.1488 Tw (benefits during the reporting period in the process of providing goods) TjT* 0.0057 Tc 0.0034 Tw (and services.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (137) Tj28.8 0 TD 0.0049 Tc 0.6442 Tw (Where future economic benefits acquired by the entity are consumed) Tj0 -10.08 TD 0.0053 Tc 3.8781 Tw (simultaneously with, or soon after, acquisition, expenses would) TjT* 0.0048 Tc 0.1963 Tw (qualify for recognition in the reporting period in which acquisition of) TjT* 0.0059 Tc 2.6192 Tw (the future economic benefits occurs. This means, in effect, that) TjT* 0.0045 Tc 2.3246 Tw (expenses would qualify for recognition in the reporting period in) TjT* 0.0054 Tc 0.7019 Tw (which the payment of cash occurs or, where payment is delayed, the) TjT* 0.0055 Tc 1.7491 Tw (liability for future payment is first recognised. In this latter case,) TjT* 0.0053 Tc 1.0358 Tw (measurement of the liability and the expense may involve a process) TjT* 0.0051 Tc 1.9 Tw (of estimation. This technique would apply to many expenses; for) TjT* 0.0051 Tc 0.004 Tw (example, employee remuneration, power and telecommunications.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (138) Tj28.8 0 TD 0.0052 Tc 0.0039 Tw (Where expenses re) Tj76.08 0 TD 0.0057 Tc 0.1749 Tw (sult directly and jointly from the same transactions) Tj-76.08 -10.08 TD -0.0089 Tc 1.1442 Tw (or other events as do revenues \226 for example, cost of goods sold or) TjETendstreamendobj93 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj94 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (48) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD -0.0088 Tc 2.738 Tw (cost of services provided during the reporting period \226 expenses) Tj0 -10.08 TD 0.0053 Tc 3.6518 Tw (should be recognised on the basis of a direct association with) TjT* 0.0054 Tc 2.217 Tw (revenues. This recognition technique is sometimes referred to as) TjT* 0.0053 Tc 2.5105 Tw (matching of expenses and revenues. It involves simultaneous or) TjT* 0.005 Tc 1.6841 Tw (combined recognition of revenues and expenses that result directly) TjT* 0.0058 Tc 3.8913 Tw (and jointly from the same transactions or other events. This) TjT* 0.005 Tc 0.8842 Tw (technique can be readily applied by profit-seeking entities and those) TjT* 0.005 Tc 1.9841 Tw (not-for-profit entities that generate revenues from the provision of) TjT* 0.0052 Tc 3.748 Tw (goods and services. However, the technique is not as readily) TjT* 0.0053 Tc 0.8738 Tw (applicable to those transactions of not-for-profit entities that involve) TjT* 0.005 Tc 1.226 Tw (the provision of goods and services free of charge. Nevertheless, a) TjT* 0.0056 Tc 2.6195 Tw (similar technique can be adopted by these entities in that where) TjT* 0.0046 Tc 3.2845 Tw (expenses that result from the provision of particular goods and) TjT* 0.005 Tc 0.0477 Tw (services free of charge can be identified, they should be recognised on) TjT* 0.0054 Tc 0.8982 Tw (the basis of an association with the provision of goods and services.) TjT* 0.006 Tc 1.2468 Tw (In that sense, a "matching" of these expenses with the provision of) TjT* 0.005 Tc 0.0041 Tw (the goods and services can be achieved.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (139) Tj28.8 0 TD 0.0046 Tc 1.7378 Tw (Where future economic benefits are expected to be consumed over) Tj0 -10.08 TD 0.005 Tc 0.2098 Tw (several reporting periods, expenses should be allocated systematically) TjT* 0.0048 Tc 1.551 Tw (to the reporting periods during which the future economic benefits) TjT* 0.0053 Tc 0.6148 Tw (are expected to be consumed. This is often necessary in recognising) TjT* 0.0057 Tc 0.3089 Tw (the expenses associated with the using up of assets such as buildings,) TjT* 0.0048 Tc 0.0043 Tw (plant and equipment, goodwill, patents and trademarks.) Tj0 -30.24 TD /F2 10.08 Tf0.0034 Tc 0.0057 Tw (Display of Revenues and Expenses) TjET170.88 385.44 140.88 0.48 re fBT142.08 366.96 TD/F0 10.08 Tf0 Tc 0 Tw (140) Tj28.8 0 TD 0.005 Tc 1.7561 Tw (The concept of revenues is concerned with gross inflows of future) Tj0 -10.08 TD 0.0052 Tc 4.2039 Tw (economic benefits and savings in outflows of future economic) TjT* 0.0057 Tc 0.7714 Tw (benefits. Similarly, the concept of expenses is concerned with gross) TjT* 0.0056 Tc 1.9475 Tw (consumptions or losses of future economic benefits. As such, the) TjT* 0.0054 Tc 0.3158 Tw (concepts of revenues and expenses include items that may in practice) TjT* 0.0057 Tc 1.5154 Tw (be displayed in operating statements as "gains" or "losses". These) TjT* 0.0052 Tc 2.5106 Tw (items include, for example, gains and losses on foreign currency) TjT* 0.0063 Tc 1.5495 Tw (transactions, gains and losses on the settlement of liabilities, gains) TjT* 0.0057 Tc 0.0274 Tw (and losses on the disposal of assets, losses resulting from write-downs) TjT* 0.005 Tc 2.3507 Tw (of assets to recoverable amount and losses resulting from natural) TjT* 0.0058 Tc 0.8341 Tw (disasters such as fire and flood. Some of these items, such as gains) TjT* 0.0056 Tc 0.3155 Tw (and losses on the disposal of assets, comprise revenues and expenses,) TjT* 0.0056 Tc 1.2035 Tw (namely the total increase in future economic benefits $revenues$, in) TjT* 0.0053 Tc 1.6438 Tw (the form of the proceeds from disposal of the assets, and the total) TjT* 0.0055 Tc 4.0236 Tw (reduction in future economic benefits $expenses$, which is the) TjT* 0.0053 Tc 0.5038 Tw (carrying amount of the assets at the time of disposal. Items reported) TjT* 0.0055 Tc 2.3236 Tw (in operating statements as gains and losses comprise revenues or) TjT* 0.0053 Tc 1.1602 Tw (expenses or a combination of both $in which case the revenues and) TjT* 0.0052 Tc 1.5879 Tw (expenses would relate to the same transaction or other event$, and) TjETendstreamendobj95 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj96 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (49) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD 0.0059 Tc 0.1899 Tw (therefore do not constitute elements of financial statements which are) Tj0 -10.08 TD 0.0049 Tc 0.0042 Tw (separate from revenues and expenses.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (141) Tj28.8 0 TD 0.0055 Tc 1.8756 Tw (The manner in which revenues and expenses are presented in the) Tj0 -10.08 TD 0.0055 Tc 0.8436 Tw (operating statement and notes in the financial report is important to) TjT* 0.0057 Tc 1.7834 Tw (assessments of the performance of the entity. It may be useful to) TjT* 0.0049 Tc 1.7109 Tw (users if particular revenues and expenses are presented jointly; for) TjT* 0.0055 Tc 2.1036 Tw (example, as "gains" or "losses". In addition, it may be useful to) TjT* 0.0054 Tc 1.3537 Tw (distinguish revenues and expenses resulting from the entity's major) TjT* 0.005 Tc 3.3642 Tw (or central operations and those resulting from other operations.) TjT* 0.0052 Tc 6.0039 Tw (These are matters of display which, although important to) TjT* 0.0057 Tc 0.0034 Tw (assessments of performance, are beyond the scope of this Statement.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (142) Tj28.8 0 TD 0.0058 Tc 2.0566 Tw (In respect of the operating statement, this Statement is concerned) Tj0 -10.08 TD 0.0059 Tc 2.1152 Tw (with the definition of its constituent elements and the criteria for) TjT* 0.0056 Tc 3.1502 Tw (recognition of those elements. The definitions of revenues and) TjT* 0.0055 Tc 1.8581 Tw (expenses set out in this Statement are compatible with a range of) TjT* 0.0058 Tc 0.0034 Tw (presentation methods.) Tj-28.8 -30.24 TD /F2 10.08 Tf0.0033 Tc 0.0059 Tw (OTHER CHANGES IN EQUITY) Tj0 -20.16 TD /F0 10.08 Tf0 Tc 0 Tw (143) Tj28.8 0 TD 0.0053 Tc 0.0571 Tw (Other changes in an entity's equity include non-reciprocal transfers to) Tj0 -10.08 TD 0.0049 Tc 3.8443 Tw (and from owners $distributions to owners and contributions by) TjT* 0.0055 Tc 0 Tw (owners$.) Tj-28.8 -30.24 TD /F2 10.08 Tf0.0041 Tc 0.005 Tw (Contributions by Owners and Distributions to Owners) TjET142.08 375.36 219.12 0.48 re fBT170.88 356.88 TD0.0048 Tc 0 Tw (Definitions) TjET170.88 355.2 44.88 0.48 re fBT142.08 336.72 TD/F0 10.08 Tf0 Tc (144) Tj28.8 0 TD /F1 10.08 Tf0.0048 Tc 1.2386 Tw ("Contributions by owners" means future economic benefits that) Tj0 -10.08 TD 0.0042 Tc 2.3089 Tw (have been contributed to the entity by parties external to the) TjT* 0.005 Tc 1.7801 Tw (entity, other than those which result in liabilities of the entity,) TjT* 0.0045 Tc 0.6692 Tw (that give rise to a financial interest in the net assets of the entity) TjT* 0.005 Tc 0 Tw (which:) Tj14.4 -20.16 TD 0.0022 Tc ($a$) Tj28.8 0 TD 0.0049 Tc 4.3242 Tw (conveys entitlement both to distributions of future) Tj0 -10.08 TD 0.0052 Tc 2.764 Tw (economic benefits by the entity during its life, such) TjT* 0.0051 Tc 1.8897 Tw (distributions being at the discretion of the ownership) TjT* 0.0048 Tc 0.4543 Tw (group or its representatives, and to distributions of any) TjT* 0.0048 Tc 0.5323 Tw (excess of assets over liabilities in the event of the entity) TjT* 0.0049 Tc 0.0043 Tw (being wound up; and/or) Tj-28.8 -20.16 TD 0.0043 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0046 Tc 0.0045 Tw (can be sold, transferred or redeemed;) TjETendstreamendobj97 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj98 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (50) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.32 TD /F1 10.08 Tf0.0052 Tc 6.0439 Tw ("distributions to owners" means future economic benefits) Tj0 -10.08 TD 0.0047 Tc 1.8808 Tw (distributed by the entity to all or part of its ownership group,) TjT* 0.0045 Tc 0.0046 Tw (either as a return on investment or as a return of investment; and) Tj0 -20.16 TD 0.0049 Tc 2.6442 Tw ("ownership group" means the group comprising those parties) Tj0 -10.08 TD 0.0046 Tc 0.4445 Tw (with a financial interest in the net assets of the entity which have) TjT* 0.0046 Tc 0.3645 Tw (obtained that interest by contributing future economic benefits to) TjT* 0.0045 Tc 0.5283 Tw (the entity in the form of contributions by owners or by acquiring) TjT* 0.0048 Tc 4.6843 Tw (the interest, established at an earlier time as a result of) TjT* 0.0045 Tc 0.0046 Tw (contributions by owners, from another party.) Tj0 -30.24 TD /F2 10.08 Tf0.0042 Tc 0.005 Tw (Nature of Contributions by Owners and Distributions to Owners) TjET170.88 526.56 260.4 0.48 re fBT142.08 508.08 TD/F0 10.08 Tf0 Tc 0 Tw (145) Tj28.8 0 TD 0.005 Tc 4.3541 Tw (Contributions by owners and distributions to owners are non-) Tj0 -10.08 TD 0.0056 Tc 1.0356 Tw (reciprocal transfers between an entity and its owners acting in their) TjT* 0.0054 Tc 1.1819 Tw (capacity as owners. Contributions by owners will usually be in the) TjT* 0.0055 Tc 1.4837 Tw (form of cash, but may also be in the form of non-monetary assets,) TjT* 0.0049 Tc 1.1082 Tw (such as property, plant and equipment, or the provision of services.) TjT* 0.006 Tc 3.0577 Tw (In some instances, the contribution is made in the form of the) TjT* 0.0057 Tc 0.0034 Tw (conversion of liabilities of the entity into equity.) Tj-28.8 -20.16 TD 0 Tc 0 Tw (146) Tj28.8 0 TD 0.0053 Tc 0.9639 Tw (Reductions in equity as a result of distributions to owners can be in) Tj0 -10.08 TD 0.0055 Tc 1.7836 Tw (the form of the transfer of assets, the rendering of services or the) TjT* 0.0054 Tc 2.1877 Tw (incurrence of liabilities. Distributions to owners are made at the) TjT* 0.0049 Tc 4.8942 Tw (discretion of the ownership group or its representatives after) TjT* 0.0055 Tc 1.3236 Tw (satisfying restrictions imposed by legislation or by agreements with) TjT* 0.0059 Tc 0.3633 Tw (other entities. Generally, an entity is not obliged to transfer assets to) TjT* 0.0054 Tc 0.9437 Tw (owners except in the event of the entity being wound up, unless the) TjT* 0.0053 Tc 1.8038 Tw (entity formally acts to distribute assets to owners by, for example,) TjT* 0.0049 Tc 0.1443 Tw (declaring a dividend. In this event, a liability to pay dividends would) TjT* 0.0051 Tc 0.7022 Tw (be recognised by the entity, which would have the effect of reducing) TjT* 0.0047 Tc 0 Tw (equity.) Tj-28.8 -30.24 TD /F2 10.08 Tf0.0026 Tc 0.0066 Tw (MEASUREMENT MODEL) Tj0 -20.16 TD /F0 10.08 Tf0 Tc 0 Tw (147) Tj28.8 0 TD 0.0051 Tc 3.148 Tw (This Statement is not premised on the adoption of a particular) Tj0 -10.08 TD 0.0058 Tc 1.23 Tw (measurement model. Application of the concepts in this Statement) TjT* 0.0052 Tc 3.1894 Tw (does not imply that assets or liabilities would be revalued. In) TjT* 0.0052 Tc 3.6305 Tw (addition, if assets or liabilities are revalued, application of the) TjT* 0.0062 Tc 1.8138 Tw (concepts in this Statement does not imply that the changes in the) TjT* 0.005 Tc 1.7801 Tw (values of assets or liabilities would be recognised as revenues and) TjT* 0.0054 Tc 1.2937 Tw (expenses. These considerations depend on the measurement model) TjT* 0.0051 Tc 1.4441 Tw (adopted. A Statement of Accounting Concepts on measurement of) TjT* 0.0061 Tc 2.253 Tw (the elements of financial statements will address the fundamental) TjT* 0.0057 Tc 0.0034 Tw (issue of measurement models.) TjETendstreamendobj99 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj100 0 obj<>streamBT286.8 164.88 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (51) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.32 TD 0 Tc 0 Tw (148) Tj28.8 0 TD 0.0051 Tc 2.0307 Tw (The concepts of capital and capital maintenance adopted, and the) Tj0 -10.08 TD 0.0052 Tc 2.5753 Tw (measurement basis employed to make those concepts operational,) TjT* 0.0045 Tc 2.8847 Tw (would determine) Tj0 Tc 0.0091 Tw ( ) Tj76.32 0 TD /F2 10.08 Tf0.0047 Tc 3.1244 Tw (inter alia) Tj40.8 0 TD /F0 10.08 Tf0.0057 Tc 3.1234 Tw ( the extent to which any increase or) Tj-117.12 -10.08 TD 0.0055 Tc 2.6436 Tw (decrease in the measured amount of an asset is identified as an) Tj0 -10.08 TD 0.0055 Tc 0.6145 Tw (enhancement or loss of future economic benefits and thus an item of) TjT* 0.0046 Tc 3.2685 Tw (revenue or expense. For example, adoption of the concepts of) TjT* 0.0053 Tc 2.3738 Tw (physical capital and physical capital maintenance would result in) TjT* 0.0055 Tc 0.8981 Tw (changes in the specific prices of productive assets held by the entity) TjT* 0.0045 Tc 2.2447 Tw (during the reporting period being recognised as changes in value) TjT* 0.0056 Tc 1.3902 Tw (which do not constitute enhancements or losses of future economic) TjT* 0.0051 Tc 1.124 Tw (benefits. Accordingly, those changes would be recognised as direct) TjT* 0.0053 Tc 0.0039 Tw (adjustments to the amount of equity, and not as revenues or expenses.) 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This Statement applies) TjT* 0.0053 Tc 0.7038 Tw (to all reporting entities in the public and private sectors, whereas the IASC) TjT* 0.005 Tc 0.4841 Tw (Framework does not apply to non-business entities in the public and private) TjT* 0.0063 Tc 0 Tw (sectors.) Tj0 -30.24 TD /F2 10.08 Tf0.0028 Tc 0.0063 Tw (New Zealand) TjET142.08 314.88 53.04 0.48 re fBT142.08 296.4 TD/F0 10.08 Tf0.0058 Tc 1.2754 Tw (The accounting concepts set out in this Statement are generally consistent) Tj0 -10.08 TD 0.0055 Tc 3.4291 Tw (with those set out in the Statement of Concepts for General Purpose) TjT* 0.0053 Tc 2.3772 Tw (Financial Reporting issued by the New Zealand Society of Accountants,) TjT* 0.0056 Tc 2.1155 Tw (insofar as that Statement addresses the definition and recognition of the) TjT* 0.0067 Tc 0.0024 Tw (elements of financial statements.) 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Tj39.6 0 TD 0.0013 Tc (A79-A82) Tj-199.44 -10.08 TD 0.0053 Tc 0.0038 Tw (Recognition of contributions as revenues:) Tj7.2 -10.08 TD 0.0058 Tc 0.0033 Tw (is there an "earnings process"?) Tj126.24 0 TD 0.0091 Tc 0 Tw (....................) Tj66 0 TD 0.0013 Tc (A83-A88) Tj-199.44 -10.08 TD 0.0048 Tc 0.0043 Tw (Should contributions be recognised as) Tj7.2 -10.08 TD 0.005 Tc 0.0041 Tw (contributions by owners?) Tj102.48 0 TD 0.0091 Tc 0 Tw (.............................) Tj100.08 0 TD 0.001 Tc (A89) Tj-180.72 -10.08 TD 0.0045 Tc 0.0046 Tw (Increased operating capability) Tj122.88 0 TD 0.0091 Tc 0 Tw (.............) Tj47.52 0 TD 0.0013 Tc (A90-A93) Tj-199.44 -10.08 TD 0.0049 Tc 0.0042 Tw (Role of disclosure) Tj72.72 0 TD 0.0091 Tc 0 Tw (................................) Tj84.48 0 TD (...........) 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A diagram of the framework is set out as Figure 1 on the) TjT* 0.0051 Tc 1.3785 Tw (next page. The framework will comprise a series of Statements of) TjT* 0.0058 Tc 3.2604 Tw (Accounting Concepts $"Concepts Statements"$ which set out the) TjT* 0.0051 Tc 1.6404 Tw (concepts which have been adopted by the Boards in respect of the) TjT* 0.0043 Tc 4.2949 Tw (nature, subject, purpose and broad content of general purpose) TjT* 0.0053 Tc 1.3539 Tw (financial reporting. Three Statements have been issued previously.) TjT* 0.0049 Tc 0.0042 Tw (These Statements $set out below$ were issued in August 1990 :) Tj28.8 -20.16 TD 0.0055 Tc 0.0037 Tw (SAC 1 "Definition of the Reporting Entity";) Tj0 -20.16 TD 0.005 Tc 1.6155 Tw (SAC 2 "Objective of General Purpose Financial Reporting";) Tj28.8 -10.08 TD 0.004 Tc 0 Tw (and) Tj-28.8 -20.16 TD 0.0056 Tc 0.0036 Tw (SAC 3 "Qualitative Characteristics of Financial Information".) Tj-57.6 -20.16 TD 0.0014 Tc 0 Tw (A2) Tj28.8 0 TD 0.0051 Tc 0.58 Tw (Components of the framework which will be completed in the future) Tj0 -10.08 TD 0.0053 Tc 2.7771 Tw (are the definition of financial reporting; basis and techniques of) TjT* 0.0051 Tc 2.364 Tw (measurement; display of information about performance, financial) TjT* 0.0055 Tc 2.2321 Tw (position, changes in financial position, and compliance; standard-) TjT* 0.0053 Tc 0.3505 Tw (setting policy and enforcement. These components of the framework) TjT* 0.0047 Tc 2.9804 Tw (are outlined in Policy Statement 5 "The Nature and Purpose of) TjT* 0.005 Tc 2.4941 Tw (Statements of Accounting Concepts", prepared by the AASB and) TjT* 0.0049 Tc 0.0042 Tw (PSASB and issued in March 1995.) Tj-28.8 -30.24 TD /F2 10.08 Tf0.0034 Tc 0.0057 Tw (Development of the Statement) TjET142.08 284.64 121.68 0.48 re fBT170.88 266.16 TD0.0033 Tc 0.0058 Tw (The Superseded Statement) TjET170.88 264.48 106.8 0.48 re fBT142.08 246 TD/F0 10.08 Tf0.0014 Tc 0 Tw (A3) Tj28.8 0 TD 0.0054 Tc 6.6894 Tw (Statement of Accounting Concepts SAC 4 "Definition and) Tj0 -10.08 TD 0.0061 Tc 1.7897 Tw (Recognition of the Elements of Financial Statements" as issued in) TjT* 0.0048 Tc 3.7376 Tw (March 1992 is superseded by this Statement. The superseded) TjT* 0.0051 Tc 1.5401 Tw (Statement was based on the following five exposure drafts and the) TjT* 0.0055 Tc 0.0036 Tw (comments received in response thereto:) TjETendstreamendobj109 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj110 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (56) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) TjETendstreamendobj111 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj112 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (57) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-103.2 484.56 TD 0.0052 Tc 1.9924 Tw (ED 42C "Definition and Recognition of Assets" $December) Tj28.8 -10.08 TD 0.0018 Tc 0 Tw (1987$;) Tj-28.8 -20.16 TD 0.0052 Tc 7.5639 Tw (ED 42D "Definition and Recognition of Liabilities") Tj28.8 -10.08 TD 0.0034 Tc 0.0058 Tw ($December 1987$;) Tj-28.8 -20.16 TD 0.0049 Tc 3.0556 Tw (ED 46B "Definition and Recognition of Expenses" $April) Tj28.8 -10.08 TD 0.0018 Tc 0 Tw (1988$;) Tj-28.8 -20.16 TD 0.0038 Tc 0.0054 Tw (ED 51A "Definition of Equity" $August 1990$; and) Tj0 -20.16 TD 0.005 Tc 1.9242 Tw (ED 51B "Definition and Recognition of Revenues" $August) Tj28.8 -10.08 TD 0.0021 Tc 0 Tw (1990$.) 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Amongst) TjT* 0.0057 Tc 3.8194 Tw (other initiatives, this included the conduct of a series of nine) TjT* 0.0049 Tc 0.2442 Tw (seminars held in the capital cities from October 1992 to March 1993,) TjT* 0.0051 Tc 2.164 Tw (and publication of articles in) Tj0 Tc 0.0091 Tw ( ) Tj129.6 0 TD /F2 10.08 Tf0.0027 Tc 2.1664 Tw (AARF Report No. 12) Tj0 Tc 0.0091 Tw ( ) Tj96.24 0 TD /F0 10.08 Tf0.004 Tc 0.0051 Tw (and ) Tj19.92 0 TD /F2 10.08 Tf0.001 Tc 2.4082 Tw (AARF &) Tj-245.76 -10.08 TD 0.0026 Tc 0.0066 Tw (AASB Report No. 16) Tj83.76 0 TD /F0 10.08 Tf0.0091 Tc 0 Tw (.) 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Tj0 -30.24 TD /F2 10.08 Tf0.0032 Tc 0.0059 Tw (Changes to Superseded Statement) TjET170.88 405.6 137.52 0.48 re fBT142.08 387.12 TD/F0 10.08 Tf0.001 Tc 0 Tw (A10) Tj28.8 0 TD 0.0053 Tc 0.0038 Tw (The main changes to the superseded Statement are set out below:) Tj0 -20.16 TD 0.0035 Tc 0 Tw ($a$) Tj28.8 0 TD /F2 10.08 Tf0.0041 Tc 0.0051 Tw (Service potential) TjET199.68 365.28 68.64 0.48 re fBT199.68 346.8 TD/F0 10.08 Tf0.0054 Tc 0.9337 Tw (The expression "service potential" has been omitted from the) Tj0 -10.08 TD 0.0051 Tc 0.5641 Tw (definitions and recognition criteria. As is noted in paragraph) TjT* 0.0055 Tc 2.4637 Tw (18 of this Statement, the characteristic of future economic) TjT* 0.0059 Tc 0.8033 Tw (benefits is synonymous with the notion of service potential, a) TjT* 0.005 Tc 0.1108 Tw (term which is used more commonly in respect of not-for-profit) TjT* 0.0058 Tc 4.1519 Tw (entities. The expression "future economic benefits" has) TjT* 0.0057 Tc 1.2301 Tw (sometimes been used in accounting texts to signify access to) TjT* 0.0056 Tc 3.8195 Tw (future cash inflows. However, the term is used in the) TjT* 0.0052 Tc 1.0839 Tw (Statement with a broader meaning) Tj0 Tc 0.0091 Tw ( ) Tj147.84 0 TD /F3 10.08 Tf2.8891 Tc 0 Tw (-) Tj5.52 0 TD /F0 10.08 Tf0.0056 Tc 1.2035 Tw ( namely, the capacity to) Tj-153.36 -10.08 TD 0.005 Tc 2.4941 Tw (provide goods and services in accordance with the entity's) Tj0 -10.08 TD 0.0057 Tc 1.1435 Tw (objectives, whether those objectives are the generation of net) TjT* 0.0049 Tc 3.0522 Tw (cash inflows or the provision of goods and services of a) TjT* 0.0048 Tc 6.3129 Tw (particular volume and quality to beneficiaries. This) TjT* 0.0056 Tc 1.7101 Tw (amendment has been made so as to simplify the expression) TjT* 0.0057 Tc 2.9101 Tw (used in the Statement, and does not change the intended) TjT* 0.0055 Tc 0.0036 Tw (meaning of the definitions and recognition criteria.) TjETendstreamendobj115 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj116 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (59) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0029 Tc 0 Tw ($b$) Tj28.8 0 TD /F2 10.08 Tf0.0046 Tc 0.0045 Tw (Omission of transitional provisions) TjET199.68 647.52 142.8 0.48 re fBT199.68 629.04 TD/F0 10.08 Tf0.0055 Tc 5.2493 Tw (The transitional provisions have been omitted. These) Tj0 -10.08 TD 0.0051 Tc 7.54 Tw (provisions required adjustments resulting from initial) TjT* 0.0052 Tc 1.8639 Tw (application of the Statement to be adjusted against retained) TjT* 0.005 Tc 1.2384 Tw (profits $surplus$ or accumulated losses $deficiency$ when the) TjT* 0.0054 Tc 0.457 Tw (Statement is first applied. The Boards agreed with comments) TjT* 0.0053 Tc 5.9352 Tw (that retention of the transitional provisions would be) TjT* 0.0048 Tc 5.8329 Tw (inappropriate in view of the non-mandatory status of) TjT* 0.0056 Tc 0.0435 Tw (Statements of Accounting Concepts enunciated in Professional) TjT* 0.0059 Tc 0.0032 Tw (Statement APS 1.) Tj0 -20.16 TD 0.0055 Tc 4.2551 Tw (Except in the circ*mstances outlined below, changes in) Tj0 -10.08 TD 0.0051 Tc 0.604 Tw (accounting policies which result from adoption of concepts in) TjT* 0.0049 Tc 2.6176 Tw (the reissued Statement would need to be accounted for as) TjT* 0.0047 Tc 0.5911 Tw (giving rise to revenues or expenses. Accordingly, they would) TjT* 0.0053 Tc 2.4999 Tw (be accounted for in a similar manner to other changes in) TjT* 0.0049 Tc 0.5109 Tw (accounting policy which do not result from initial adoption of) TjT* 0.0046 Tc 0.9045 Tw (Accounting Standards. An exception to this approach would) TjT* 0.0052 Tc 2.724 Tw (arise where there is a statutory requirement to change an) TjT* 0.0053 Tc 1.7138 Tw (accounting policy with the effect that particular concepts in) TjT* 0.0051 Tc 5.7983 Tw (the reissued Statement are adopted, and the statutory) TjT* 0.0054 Tc 3.1923 Tw (requirement specifies the making of an initial accounting) TjT* 0.0049 Tc 3.0342 Tw (entry to give retroactive effect to the changed accounting) TjT* 0.0053 Tc 0.5318 Tw (policy. In such an instance, any resulting revenue or expense) TjT* 0.0047 Tc 0.1416 Tw (would, consistent with paragraph 15 of Australian Accounting) TjT* 0.0043 Tc 5.1648 Tw (Standard AAS 1 "Profit and Loss or other Operating) TjT* 0.0044 Tc 0.4504 Tw (Statements" and paragraph 11 of Accounting Standard AASB) TjT* 0.0046 Tc 1.2579 Tw (1018: Profit and Loss Accounts, need to be adjusted directly) TjT* 0.0048 Tc 5.2443 Tw (against retained profits $surplus$ or accumulated losses) TjT* 0.0054 Tc 0 Tw ($deficiency$.) Tj-28.8 -20.16 TD 0.0042 Tc ($c$) Tj28.8 0 TD /F2 10.08 Tf0.0032 Tc 0.0059 Tw (Changes to commentary) TjET199.68 324.96 98.16 0.48 re fBT199.68 306.48 TD/F0 10.08 Tf0.0049 Tc 2.0842 Tw (The following commentary has been added so as to clarify) Tj0 -10.08 TD 0.0049 Tc 0.0042 Tw (further the meaning of particular concepts:) Tj0 -20.16 TD 0.0046 Tc 0 Tw ($i$) Tj28.8 0 TD 0.0054 Tc 2.3771 Tw (paragraph 52 notes that it is not necessary that the) Tj0 -10.08 TD 0.005 Tc 0.7002 Tw (identity of the party to whom an obligation is owed be) TjT* 0.0047 Tc 0.0044 Tw (known in order for a present obligation to exist;) Tj-28.8 -20.16 TD 0.0053 Tc 0 Tw ($ii$) Tj28.8 0 TD 0.0023 Tc (para) Tj17.76 0 TD 0.0048 Tc 1.551 Tw (graph 53 notes that the party to whom a present) Tj-17.76 -10.08 TD 0.0045 Tc 0.6446 Tw (obligation is owed may differ from the party or parties) Tj0 -10.08 TD 0.0054 Tc 1.1737 Tw (which will receive goods or services as satisfaction of) TjT* 0.0053 Tc 0.0038 Tw (the obligation;) TjETendstreamendobj117 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj118 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (60) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-103.2 484.56 TD 0.0057 Tc 0 Tw ($iii$) Tj28.8 0 TD 0.0046 Tc 2.8845 Tw (paragraph 60 notes that recognition of the need to) Tj0 -10.08 TD 0.0043 Tc 2.9249 Tw (make future expenditures on overhauls, repairs and) TjT* 0.0047 Tc 1.2944 Tw (renewals of property, plant and equipment as a result) TjT* 0.004 Tc 3.2751 Tw (of operations prior to the reporting date would be) TjT* 0.0045 Tc 0.3047 Tw (effected by the recognition of an appropriate amount of) TjT* 0.0047 Tc 0 Tw (depreciation;) Tj-28.8 -20.16 TD 0.004 Tc ($iv$) Tj28.8 0 TD 0.0041 Tc 3.941 Tw (paragraph 62, which provides commentary o) Tj200.88 0 TD 0.0073 Tc 4.0818 Tw (n the) Tj-200.88 -10.08 TD 0.0059 Tc 5.0032 Tw (characteristics of liabilities, notes that the future) Tj0 -10.08 TD 0.0058 Tc 0.4834 Tw (sacrifices of economic benefits that an entity is obliged) TjT* 0.0053 Tc 2.7239 Tw (to make to other entities may be in various forms.) TjT* 0.0053 Tc 0.0519 Tw (These may range from the payment of cash to the using) TjT* 0.0051 Tc 1.714 Tw (up of plant, equipment and consumable stores in the) TjT* 0.0041 Tc 4.4278 Tw (provision of goods and services. The paragraph) TjT* 0.0062 Tc 1.5115 Tw (emphasises that the form in which economic benefits) TjT* 0.0053 Tc 0.7238 Tw (are sacrificed does not determine the basis or bases on) TjT* 0.0055 Tc 1.6494 Tw (which liabilities would be measured, that issue being) TjT* 0.0055 Tc 0.0036 Tw (beyond the scope of the Statement;) Tj-28.8 -20.16 TD 0.0029 Tc 0 Tw ($v$) Tj28.8 0 TD 0.0046 Tc 3.7417 Tw (paragraphs 72 to 75 explain the circ*mstances in) Tj0 -10.08 TD 0.0054 Tc 2.5237 Tw (which application of the definitions and recognition) TjT* 0.0054 Tc 5.0094 Tw (criteria for assets and liabilities would result in) TjT* 0.0057 Tc 5.6194 Tw (discontinued recognition of assets and liabilities.) TjT* 0.0048 Tc 0.5529 Tw (Those paragraphs do not address the classification $for) TjT* 0.0048 Tc 4.8043 Tw (example, as revenues or expenses$ of accounting) TjT* 0.0056 Tc 1.8436 Tw (entries which reflect the discontinued recognition, or) TjT* 0.006 Tc 5.2831 Tw (subsequent reinstatement, of assets and liabilities) TjT* 0.0049 Tc 1.9642 Tw (because the appropriate classification will depend on) TjT* 0.0062 Tc 0.0029 Tw (the circ*mstances;) Tj-28.8 -20.16 TD 0.004 Tc 0 Tw ($vi$) Tj28.8 0 TD 0.0043 Tc 0.9306 Tw (paragraphs 101 to 105 elaborate on the characteristics) Tj0 -10.08 TD 0.0047 Tc 2.0045 Tw (of reciprocal and non-reciprocal transfers, to explain) TjT* 0.0053 Tc 2.2324 Tw (whether an inflow of future economic benefits gives) TjT* 0.0053 Tc 0.0038 Tw (rise to a liability or an increase in equity; and) Tj-28.8 -20.16 TD 0.0046 Tc 0 Tw ($vii$) Tj28.8 0 TD 0.0044 Tc 2.1648 Tw (paragraph 129 indicates that under some accounting) Tj0 -10.08 TD 0.0057 Tc 3.0891 Tw (models, recognised increases in the value of assets) TjT* 0.0052 Tc 3.364 Tw (would not be identified as enhancements of future) TjT* 0.0051 Tc 7.284 Tw (economic benefits. Therefore, they would be) TjT* 0.0052 Tc 3.6039 Tw (recognised as direct adjustments to the amount of) TjT* 0.0048 Tc 0.1758 Tw (equity $such as additions to revaluation reserves$ rather) TjT* 0.0059 Tc 0.0032 Tw (than as revenues.) Tj-28.8 -20.16 TD 0.0043 Tc 0.7934 Tw (Former commentary paragraph 131, concerning the nature of) Tj0 -10.08 TD 0.0053 Tc 0.8139 Tw (dividends, has been omitted. Interested parties had indicated) TjT* 0.0051 Tc 1.764 Tw (that the paragraph did not assist their understanding of the) TjT* 0.0051 Tc 0.004 Tw (nature of distributions to owners.) TjETendstreamendobj119 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj120 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (61) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) TjETendstreamendobj121 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj122 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (62) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 483.12 TD 0.0022 Tc 0 Tw ($d$) Tj28.8 0 TD /F2 10.08 Tf0.004 Tc 0.0051 Tw (Omission of operative date) TjET199.68 646.08 109.44 0.48 re fBT199.68 627.12 TD/F0 10.08 Tf0.0051 Tc 2.284 Tw (The reissued Statement does not specify an operative date.) Tj0 -10.08 TD 0.0047 Tc 5.3911 Tw (The Boards are of the view that operative dates are) TjT* 0.005 Tc 2.0956 Tw (inappropriate for Statements of Accounting Concepts. The) TjT* 0.0052 Tc 0.9879 Tw (Statement is effectively operative as a guide to the Boards in) TjT* 0.0054 Tc 9.3638 Tw (addressing accounting issues, immediately upon its) TjT* 0.0058 Tc 0.0034 Tw (finalisation by the Boards.) Tj-28.8 -21.6 TD 0.0042 Tc 0 Tw ($e$) Tj28.8 0 TD /F2 10.08 Tf0.004 Tc 0.0052 Tw (Omission of former Appendix) TjET199.68 553.44 119.28 0.48 re fBT199.68 534.48 TD/F0 10.08 Tf0.005 Tc 1.1441 Tw (The Appendix to the superseded Statement has been omitted) Tj0 -10.08 TD 0.0046 Tc 5.216 Tw (from the reissued Statement. The Appendix provided) TjT* 0.0054 Tc 1.1798 Tw (guidance on some applications of the concepts set out in the) TjT* 0.005 Tc 3.4441 Tw (superseded Statement to particular accounting issues, and) TjT* 0.0049 Tc 0.2142 Tw (explored the implications of those concepts for some reporting) TjT* 0.0049 Tc 0.6042 Tw (practices applied by a number of entities prior to the issuance) TjT* 0.0055 Tc 6.0721 Tw (of that Statement. Commentators on the superseded) TjT* 0.0052 Tc 6.7925 Tw (Statement had argued that the inclusion of detailed) TjT* 0.0052 Tc 0.2039 Tw (interpretations in the superseded Statement was inappropriate.) TjT* 0.0054 Tc 2.4337 Tw (In their view, those interpretations were unnecessary for a) TjT* 0.0053 Tc 4.5338 Tw (Statement setting out broad concepts, and some of the) TjT* 0.0045 Tc 6.2104 Tw (interpretations were not appropriate for the range of) TjT* 0.0052 Tc 1.0972 Tw (transactions to which they could potentially be applied. The) TjT* 0.0052 Tc 5.1239 Tw (Boards are of the view that retention of the detailed) TjT* 0.0048 Tc 0.9986 Tw (interpretations would be inappropriate for a Statement which) TjT* 0.0051 Tc 1.174 Tw (sets out broad concepts, and that any detailed interpretations) TjT* 0.005 Tc 0.3774 Tw (of particular concepts which are not integral to explaining the) TjT* 0.0051 Tc 0.994 Tw (meaning of those concepts should be included in Accounting) TjT* 0.0049 Tc 0.0042 Tw (Standards and other documents issued by the Boards.) Tj-57.6 -30.24 TD /F2 10.08 Tf0.0043 Tc 0.0049 Tw (Comparison with Overseas Frameworks) TjET142.08 321.12 162 0.48 re fBT142.08 302.64 TD/F0 10.08 Tf0.001 Tc 0 Tw (A11) Tj28.8 0 TD 0.0055 Tc 0.537 Tw (The following discussion compares this Statement with final or draft) Tj0 -10.08 TD 0.0054 Tc 2.8837 Tw (conceptual framework statements issued in overseas jurisdictions.) TjT* 0.0058 Tc 0.0033 Tw (Those jurisdictions and statements are:) TjETendstreamendobj123 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj124 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (63) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.56 TD 0.0061 Tc 0.003 Tw (United States) Tj0 -10.08 TD 0.0046 Tc 0.0045 Tw (of America) TjETq 233.04 647.28 218.64 10.08 re h W n BT233.04 649.2 TD0.0056 Tc 1.4036 Tw (Statements of Financial Accounting Concepts No. 5) TjETQ q 233.04 637.2 218.64 10.08 re h W n BT233.04 639.12 TD0.0059 Tc 9.7232 Tw ("Recognition and Measurement in Financial) TjETQ q 233.04 627.12 218.64 10.08 re h W n BT233.04 629.04 TD0.0057 Tc 2.2434 Tw (Statements of Business Enterprises" $SFAC 5$ and) TjETQ q 233.04 617.04 218.64 10.08 re h W n BT233.04 618.96 TD0.0058 Tc 0.689 Tw (No. 6 "Elements of Financial Statements" $SFAC 6$,) TjETQ q 233.04 606.96 218.64 10.08 re h W n BT233.04 608.88 TD0.005 Tc 1.0041 Tw (issued by the Financial Accounting Standards Board) TjETQ q 233.04 596.88 214.56 10.08 re h W n BT233.04 598.8 TD0.0037 Tc 3.7254 Tw ($FASB$ in December 1984 and December 1985) TjETQ q 447.6 600 4.08 6.96 re h W n BT447.6 601.92 TD/F0 7.92 Tf0.12 Tc 0 Tw (1) TjETQ BT233.04 588.72 TD0.0053 Tc 0 Tw (respectively;) Tj-90.96 -20.16 TD 0.0056 Tc (International) Tj0 -10.08 TD 0.0047 Tc (Accounting) TjT* 0.0045 Tc (Standards) TjT* 0.0055 Tc 0.0036 Tw (Committee $IASC$) TjETq 233.04 566.64 219.6 10.08 re h W n BT233.04 568.56 TD0.0047 Tc 2.0844 Tw (Framework for the Preparation and Presentation of) TjETQ BT233.04 558.48 TD0.0057 Tc 0.0034 Tw (Financial Statements, issued in July 1989;) Tj-90.96 -40.32 TD 0.0045 Tc 0.0046 Tw (South Africa) TjETq 233.04 516.24 218.64 10.08 re h W n BT233.04 518.16 TD0.0042 Tc 0.7935 Tw (Section AC 000 $Framework for the Preparation and) TjETQ q 233.04 506.16 218.64 10.08 re h W n BT233.04 508.08 TD0.0061 Tc 8.211 Tw (Presentation of Financial Statements$ of the) TjETQ q 233.04 496.08 218.64 10.08 re h W n BT233.04 498 TD0.0049 Tc 1.7243 Tw (Members' Handbook of The South African Institute) TjETQ BT233.04 487.92 TD0.0046 Tc 0.0046 Tw (of Chartered Accountants, issued in November 1990;) Tj-90.96 -20.16 TD 0.0044 Tc 0 Tw (Canada) Tj90.96 0 TD 0.0055 Tc 0.2436 Tw (Section 1000 $"Financial Statement Concepts"$ of the) TjETq 233.04 455.76 219.6 10.08 re h W n BT233.04 457.68 TD0.0055 Tc 5.3796 Tw (Recommendations of The Canadian Institute of) TjETQ q 233.04 445.68 218.64 10.08 re h W n BT233.04 447.6 TD0.0053 Tc 4.3238 Tw (Chartered Accountants $CICA$, issued in March) TjETQ BT233.04 437.52 TD0.0014 Tc 0 Tw (1991;) Tj-90.96 -20.16 TD 0.0045 Tc 0.0047 Tw (New Zealand) TjETq 233.04 415.44 218.64 10.08 re h W n BT233.04 417.36 TD0.0053 Tc 0.5239 Tw (Statement of Concepts for General Purpose Financial) TjETQ q 233.04 405.36 219.6 10.08 re h W n BT233.04 407.28 TD0.005 Tc 3.1584 Tw (Reporting, issued by the New Zealand Society of) TjETQ BT233.04 397.2 TD0.0047 Tc 0.0044 Tw (Accountants in June 1993; and) Tj-90.96 -20.16 TD 0.0047 Tc 0.0045 Tw (United Kingdom) TjETq 233.04 375.12 218.64 10.08 re h W n BT233.04 377.04 TD0.0059 Tc 2.0832 Tw (Chapter 3 $"The elements of financial statements"$) TjETQ BT233.04 366.96 TD0.0054 Tc 0.2738 Tw (and Chapter 4 $"The recognition of items in financial) TjETq 233.04 354.96 218.64 10.08 re h W n BT233.04 356.88 TD0.0059 Tc 3.6432 Tw (statements"$ of the Draft Statement of Principles) TjETQ q 233.04 344.88 218.64 10.08 re h W n BT233.04 346.8 TD0.005 Tc 3.2842 Tw (issued for comment by the Accounting Standards) TjETQ BT233.04 336.72 TD0.0038 Tc 0.0053 Tw (Board in July 1992.) Tj-90.96 -30.24 TD 0.001 Tc 0 Tw (A12) Tj28.8 0 TD 0.0061 Tc 1.903 Tw (The concepts in this Statement are similar to those set out in the) Tj0 -10.08 TD 0.0055 Tc 0.377 Tw (abovenamed overseas Concepts Statements. This is evidenced by the) TjT* 0.0054 Tc 1.1557 Tw (comparison of the definitions and recognition criteria set out in the) TjT* 0.0051 Tc 1.044 Tw (attached table. The Boards regard international compatibility as an) TjT* 0.0049 Tc 3.8142 Tw (important feature of a conceptual framework. The similarities) TjT* 0.0053 Tc 1.7798 Tw (between the concepts in SAC 4 and those in overseas frameworks) TjT* 0.0055 Tc 0.697 Tw (underpin the Boards' decision to substantially retain the concepts set) TjT* 0.0054 Tc 0.0037 Tw (out in the superseded Statement.) Tj-28.8 -19.44 TD 0 Tc 0.0091 Tw ( ) Tj79.2 0 TD ( ) TjET142.08 218.64 144 0.48 re fBT142.08 211.2 TD/F0 7.92 Tf0.12 Tc 0 Tw (1) Tj14.4 -3.12 TD -0.0767 Tc 2.4096 Tw (SFAC 6 was issued as a replacement Statement for Statement of Financial Accounting) Tj0 -7.92 TD -0.0845 Tc 0.4573 Tw (Concepts No. 3 "Elements of Financial Statements of Business Enterprises", which was issued) TjT* -0.0277 Tc -0.1195 Tw (in December 1980.) TjETendstreamendobj125 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj126 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (64) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 474.48 TD 0.001 Tc 0 Tw (A13) Tj28.8 0 TD 0.006 Tc 0.0031 Tw (Nevertheless, there exist some differences between this Statement and) Tj0 -10.08 TD 0.0057 Tc 0.9335 Tw (overseas Concepts Statements. The more significant differences are) TjT* 0.0049 Tc 0.0043 Tw (outlined below.) Tj0 -30.24 TD /F2 10.08 Tf0.0044 Tc 0.0047 Tw (Definitions of Gains and Losses) TjET170.88 587.04 129.12 0.48 re fBT142.08 568.56 TD/F0 10.08 Tf0.001 Tc 0 Tw (A14) Tj28.8 0 TD 0.0059 Tc 0.2672 Tw (In some jurisdictions, gains and losses have been defined as elements) Tj0 -10.08 TD 0.005 Tc 4.5108 Tw (separate from revenues and expenses. A comparison of this) TjT* 0.0053 Tc 0.0038 Tw (Statement with overseas frameworks in this regard follows:) Tj0 -20.16 TD 0.0035 Tc 0 Tw ($a$) Tj28.8 0 TD 0.0056 Tc 1.0435 Tw (consistent with SAC 4, the New Zealand, South African and) Tj0 -10.08 TD 0.0047 Tc 1.8559 Tw (IASC frameworks have defined revenues $or "income"$ and) TjT* 0.0055 Tc 0.4836 Tw (expenses to encompass gains and losses, with reporting of the) TjT* 0.0055 Tc 3.0756 Tw (latter items being treated as a matter of display $that is,) TjT* 0.0054 Tc 0.998 Tw (nothing in those definitions precludes revenues and expenses) TjT* 0.0052 Tc 0.0039 Tw (from being presented on a net basis$;) Tj-28.8 -20.16 TD 0.0029 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0051 Tc 0.934 Tw (the United Kingdom framework has defined gains and losses) Tj0 -10.08 TD 0.0053 Tc 3.5138 Tw (to encompass revenues and expenses. The difference in) TjT* 0.0053 Tc 3.7067 Tw (terminology between gains and revenues, and losses and) TjT* 0.0052 Tc 0.0039 Tw (expenses, is treated as a matter of display only; and) Tj-28.8 -20.16 TD 0.0042 Tc 0 Tw ($c$) Tj28.8 0 TD 0.0052 Tc 1.4096 Tw (the United States and Canadian frameworks define revenues) Tj0 -10.08 TD 0.0053 Tc 3.3905 Tw (and expenses separately from gains and losses. In both) TjT* 0.0052 Tc 2.541 Tw (jurisdictions, revenues and expenses are defined as arising) TjT* 0.0051 Tc 1.7907 Tw (from the entity's central or ordinary operations. Gains and) TjT* 0.0058 Tc 2.6133 Tw (losses are, effectively, all other increases and decreases in) TjT* 0.004 Tc 0 Tw (equity) Tj24.72 3.12 TD /F0 7.92 Tf0.12 Tc (2) Tj4.08 -3.12 TD /F0 10.08 Tf0.0055 Tc 0.4569 Tw ( that do not arise from transactions with owners acting) Tj-28.8 -10.08 TD 0.0057 Tc 0.0034 Tw (in their capacity as owners.) Tj-57.6 -20.16 TD 0.001 Tc 0 Tw (A15) Tj28.8 0 TD 0.0048 Tc 0.0043 Tw (The ) Tj21.84 0 TD 0.0051 Tc 3.4841 Tw (defining of gains and losses separately from revenues and) Tj-21.84 -10.08 TD 0.0053 Tc 1.3478 Tw (expenses was formally considered by the AASB and PSASB in the) Tj0 -10.08 TD 0.0045 Tc 1.0979 Tw (preparation and review of the superseded Statement. The approach) TjT* 0.0048 Tc 0.3163 Tw (was not supported by the Boards, primarily because of the difficulties) TjT* 0.0054 Tc 1.4095 Tw (of consistently distinguishing inflows and outflows from "ordinary") TjT* 0.005 Tc 2.1641 Tw (or "central" operations $such as production or sale of inventories,) TjT* 0.005 Tc 0.7001 Tw (rendering of services and the provision of finance$ from inflows and) TjT* 0.005 Tc 2.2975 Tw (outflows $such as purchase of plant, collections from debtors and) TjT* 0.0051 Tc 1.5507 Tw (receipt of borrowings$ which are not "central" but nevertheless are) TjT* 0.0058 Tc 2.1233 Tw (often essential to the operations of the entity. Being a matter of) Tj-28.8 -11.52 TD 0 Tc 0.0091 Tw ( ) Tj79.2 0 TD ( ) TjET142.08 226.56 144 0.48 re fBT142.08 219.12 TD/F0 7.92 Tf0.12 Tc 0 Tw (2) Tj14.4 -3.12 TD -0.0844 Tc 0.1259 Tw (The United States and Canadian frameworks each define gains as "increases in equity ... except) Tj0 -7.92 TD -0.088 Tc 0.2289 Tw (those that result from revenues...", and define losses as "decreases in equity ... except those that) TjT* -0.0856 Tc 2.1421 Tw (result from expenses...". Therefore, those frameworks identify revenues and expenses as) TjT* -0.081 Tc -0.0661 Tw (elements that result in increases in equity and decreases in equity, respectively.) TjETendstreamendobj127 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj128 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (65) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0055 Tc 0.8036 Tw (display, the presentation of revenues and expenses jointly as "gains") Tj0 -10.08 TD 0.0064 Tc 0.5918 Tw (and "losses" is compatible with the concepts in this Statement. This) TjT* 0.0054 Tc 3.4837 Tw (display issue will be the subject of a Statement of Accounting) TjT* 0.005 Tc 0.0041 Tw (Concepts on the display of performance.) Tj0 -30.24 TD /F2 10.08 Tf0.0032 Tc 0.006 Tw (Concept of Equity) TjET170.88 587.04 73.44 0.48 re fBT142.08 568.56 TD/F0 10.08 Tf0.001 Tc 0 Tw (A16) Tj28.8 0 TD 0.0056 Tc 1.5235 Tw (Equity is defined as a residual in this Statement and in the IASC,) Tj0 -10.08 TD 0.0051 Tc 0.6941 Tw (New Zealand, South African and United States $FASB$ frameworks.) TjT* 0.0054 Tc 1.6838 Tw (Equity is defined as an ownership interest in the United Kingdom) TjT* 0.0047 Tc 0.0044 Tw (and Canadian frameworks.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A17) Tj28.8 0 TD 0.0051 Tc 1.9677 Tw (Defining equity as a residual avoids any need to distinguish, at a) Tj0 -10.08 TD 0.0054 Tc 1.8337 Tw (definitional level, between equity of profit-seeking entities and net) TjT* 0.0057 Tc 0.6834 Tw (assets of not-for-profit entities. It enables a single set of concepts to) TjT* 0.0054 Tc 4.3237 Tw (be applied to all entities. In addition, each of the overseas) TjT* 0.006 Tc 0.5791 Tw (frameworks is substantially similar to this Statement in the way they) TjT* 0.0058 Tc 1.3997 Tw (define assets and liabilities, and in the identification of equity as a) TjT* 0.005 Tc 0.2641 Tw (residual $whether or not it is defined as a residual$. Accordingly, the) TjT* 0.0058 Tc 3.7953 Tw (meaning of the definition of equity in this Statement and the) TjT* 0.0055 Tc 0.9036 Tw (definitions of equity in overseas frameworks is substantially similar,) TjT* 0.0058 Tc 0.0033 Tw (notwithstanding the differences in expression.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A18) Tj28.8 0 TD 0.0054 Tc 2.6437 Tw (For these reasons, the Boards decided to retain the definition of) Tj0 -10.08 TD 0.0055 Tc 0.0036 Tw (equity as a residual in the reissued Statement.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A19) Tj28.8 0 TD 0.0053 Tc 2.8238 Tw (Concerns have been expressed in submissions on the superseded) Tj0 -10.08 TD 0.0051 Tc 0.316 Tw (Statement about the implications of a residual definition of equity for) TjT* 0.0063 Tc 1.0501 Tw (the identification of different interests in the net assets of an entity.) TjT* 0.0057 Tc 1.3998 Tw (The definition of equity in this Statement is neutral in this regard.) TjT* 0.0048 Tc 2.6203 Tw (Various methods of display of the components of equity may be) TjT* 0.005 Tc 0.2441 Tw (adopted. The issue of the display of components of equity will be the) TjT* 0.0053 Tc 2.4279 Tw (subject of a Statement of Accounting Concepts on the display of) TjT* 0.0061 Tc 0.0031 Tw (financial position.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A20) Tj28.8 0 TD 0.0058 Tc 0.9873 Tw (FASB Concepts Statement No. 6 $SFAC 6$ contrasts "net assets" of) Tj0 -10.08 TD 0.0053 Tc 0.7538 Tw (not-for-profit organisations with "equity" of a business enterprise, in) TjT* 0.0051 Tc 3.7107 Tw (that the former "is not an ownership interest" $paragraph 90$.) TjT* 0.0051 Tc 1.0974 Tw (However, SFAC 6 defines net assets of a not-for-profit organisation) TjT* 0.0057 Tc 1.0663 Tw (in the same words as equity, that is, as a residual. In addition, the) TjT* 0.0054 Tc 0.6583 Tw (commentary in SFAC 6 does not imply that the existence or amount) TjT* 0.005 Tc 1.8521 Tw (of equity of business enterprises would be identified in a different) TjT* 0.0047 Tc 8.4044 Tw (manner than would equity of not-for-profit organisations.) TjT* 0.0052 Tc 0.0039 Tw (Accordingly, the differences between SFAC 6 and SAC 4 $which uses) TjT* 0.0056 Tc 0.6144 Tw ("equity" as the term corresponding to net assets of all entities$ relate) TjT* 0.0051 Tc 0.0041 Tw (only to terminology.) TjETendstreamendobj129 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj130 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (66) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.56 TD 0.001 Tc 0 Tw (A21) Tj28.8 0 TD 0.0057 Tc 0.5134 Tw (The Canadian Concepts Statement defines "net assets" for non-profit) Tj0 -10.08 TD 0.0056 Tc 1.8363 Tw (organisations, but notes that this is also described as equity. The) TjT* 0.005 Tc 1.3242 Tw (New Zealand, IASC, South African and United Kingdom Concepts) TjT* 0.0059 Tc 0.9032 Tw (Statements define equity without distinguishing it from "net assets",) TjT* 0.0051 Tc 0.7022 Tw (although it should be noted that the latter three of those frameworks) TjT* 0.0053 Tc 0.0039 Tw (were developed for business entities only.) Tj0 -30.24 TD /F2 10.08 Tf0.0042 Tc 0.0049 Tw (General Recognition Criteria) TjET170.88 566.88 120 0.48 re fBT142.08 548.4 TD/F0 10.08 Tf0.001 Tc 0 Tw (A22) Tj28.8 0 TD 0.0053 Tc 1.6838 Tw (The criteria for recognition of an element are substantially similar) Tj0 -10.08 TD 0.0048 Tc 3.7243 Tw (but structured differently among the frameworks. The FASB's) TjT* 0.0044 Tc 4.8733 Tw (recognition criteria differ from other frameworks by referring) TjT* 0.0061 Tc 1.491 Tw (specifically to relevance, which is implicit in the definitions of the) TjT* 0.0073 Tc 0 Tw (elements.) Tj-28.8 -20.16 TD 0.001 Tc (A23) Tj28.8 0 TD 0.0053 Tc 1.8172 Tw (A difference of expression between the structure of the definitions) Tj0 -10.08 TD 0.0053 Tc 0.6518 Tw (and recognition criteria in the various frameworks is that the FASB,) TjT* 0.0043 Tc 5.4348 Tw (IASC and South African frameworks refer to "expected" or) TjT* 0.0054 Tc 0.0037 Tw ("probable" future benefits/sacrifices in the ) Tj172.8 0 TD /F2 10.08 Tf0.0045 Tc 0 Tw (definitions) Tj42.96 0 TD /F0 10.08 Tf0.005 Tc 0.1241 Tw (. The IASC and) Tj-215.76 -10.08 TD 0.0047 Tc 5.8544 Tw (South African frameworks also refer to "probable" in their) Tj0 -10.08 TD 0.0053 Tc 1.3478 Tw (recognition criteria. The difference in the FASB, IASC and South) TjT* 0.005 Tc 0.3508 Tw (African wording is not understood to connote a significant difference) TjT* 0.0055 Tc 1.8756 Tw (in meaning from that in the Australian, New Zealand and United) TjT* 0.0055 Tc 2.7336 Tw (Kingdom definitions. The Canadian definitions refer to benefits) TjT* 0.0059 Tc 3.1499 Tw (which may be obtained/transferred. This is consistent with the) TjT* 0.0063 Tc 0.8828 Tw (definitions in this Statement, and substantially similar to the FASB,) TjT* 0.0055 Tc 3.0756 Tw (IASC and South African definitions. In respect of the FASB's) TjT* 0.0052 Tc 2.5106 Tw (framework, this view is supported by the following comments in) TjT* 0.0031 Tc 0.006 Tw (paragraph 47 of SFAC 6:) Tj14.4 -20.16 TD 0.0048 Tc 1.1607 Tw ("The degree of probability of a future economic benefit ... $is a$) Tj0 -10.08 TD 0.0052 Tc 0.3506 Tw (matter of recognition and measurement that $is$ beyond the scope) TjT* 0.0067 Tc 0.9624 Tw (of this Statement.) Tj73.2 3.12 TD /F0 7.92 Tf0.12 Tc 0 Tw (3) Tj4.08 -3.12 TD /F0 10.08 Tf0.006 Tc 1.1345 Tw ( ... Matters involving ... effects of uncertainty) Tj-77.28 -10.08 TD 0.0055 Tc 1.5745 Tw (... may be significant in applying a definition, but they are not) Tj0 -10.08 TD 0.0055 Tc 0.0036 Tw (part of the definition.") Tj-43.2 -87.84 TD 0 Tc 0.0091 Tw ( ) Tj79.2 0 TD ( ) TjET142.08 210.72 144 0.48 re fBT142.08 203.28 TD/F0 7.92 Tf0.12 Tc 0 Tw (3) Tj14.4 -3.12 TD -0.0805 Tc 2.2476 Tw (That is, it falls within the scope of Statement of Financial Accounting Concepts No. 5) Tj0 -7.92 TD -0.0932 Tc -0.0539 Tw ("Recognition and Measurement in Financial Statements of Business Enterprises".) TjETendstreamendobj131 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj132 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (67) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD /F2 10.08 Tf0.003 Tc 0.0061 Tw (Recognition of Revenues) TjET170.88 647.52 100.56 0.48 re fBT142.08 629.04 TD/F0 10.08 Tf0.001 Tc 0 Tw (A24) Tj28.8 0 TD 0.0048 Tc 1.3004 Tw (Although virtually all of the oversea) Tj153.12 0 TD 0.004 Tc 1.4451 Tw (s frameworks adopt probability) Tj-153.12 -10.08 TD 0.0052 Tc 2.0305 Tw (as a general criterion for the recognition of an element) Tj239.28 3.12 TD /F0 7.92 Tf0.12 Tc 0 Tw (4) Tj4.08 -3.12 TD /F0 10.08 Tf0.006 Tc 2.1631 Tw (, most of) Tj-243.36 -10.08 TD 0.0048 Tc 2.9744 Tw (those frameworks include a more stringent requirement or more) Tj0 -10.08 TD 0.0048 Tc 5.2577 Tw (stringent guidance that would be applied in practice to the) TjT* 0.0051 Tc 0.5058 Tw (recognition of revenues or their equivalent. This is because of views) TjT* 0.0049 Tc 1.0708 Tw (that the recognition criteria need to be applied prudently, especially) TjT* 0.0053 Tc 4.8039 Tw (in respect of revenues; and because some of those Concepts) TjT* 0.0063 Tc 4.3228 Tw (Statements attempt to establish the implicit links between the) TjT* 0.0056 Tc 0.0036 Tw (concepts specified therein and historical practices.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A25) Tj28.8 0 TD 0.0057 Tc 0.0034 Tw (For example, FASB Concepts Statement No. 5 states that:) Tj14.4 -20.16 TD 0.0056 Tc 3.0335 Tw ("... as a reaction to uncertainty, more stringent requirements) Tj0 -10.08 TD 0.0048 Tc 3.33 Tw (historically have been imposed for recognizing revenues and) TjT* 0.0055 Tc 4.4136 Tw (gains than for recognizing expenses and losses, and those) TjT* 0.005 Tc 2.507 Tw (conservative reactions influence the guidance for applying the) TjT* 0.0046 Tc 0.0045 Tw (recognition criteria to components of earnings" $paragraph 81$.) Tj-43.2 -20.16 TD 0.001 Tc 0 Tw (A26) Tj28.8 0 TD 0.0046 Tc 2.6145 Tw (Chapter 4 of the United Kingdom Accounting Standards Board's) Tj0 -10.08 TD 0.0056 Tc 3.6378 Tw (Discussion Draft Statement of Principles includes the following) TjT* 0.0054 Tc 0 Tw (commentary:) Tj14.4 -20.16 TD 0.0077 Tc (") Tj4.08 0 TD /F2 10.08 Tf0.0039 Tc 0.8623 Tw (In dealing with uncertainty, prudence requires more persuasive) Tj-4.08 -10.08 TD 0.0032 Tc 0.7792 Tw (evidence $of both occurrence and amount$ for the recognition of) Tj0 -10.08 TD 0.0041 Tc 0.4632 Tw (items that result in an increase in equity than for the recognition) TjT* 0.004 Tc 0.6651 Tw (of items that do not.) Tj84 0 TD /F0 10.08 Tf0.0049 Tc 0.7242 Tw ( ... However, the exercise of prudence does) Tj-84 -10.08 TD 0.0057 Tc 2.8616 Tw (not allow for the omission of assets or gains where there is) Tj0 -10.08 TD 0.0052 Tc 0.9639 Tw (sufficient evidence of occurrence and reliability of measurement,) TjT* 0.0058 Tc 0.1325 Tw (or for the inclusion of liabilities or losses where there is not. This) TjT* 0.0052 Tc 0.4306 Tw (would amount to the deliberate understatement of assets or gains,) TjT* 0.0051 Tc 0.214 Tw (or the deliberate overstatement of liabilities or losses." $paragraph) TjT* 0.0011 Tc 0 Tw (24$) Tj-43.2 -20.16 TD 0.001 Tc (A27) Tj28.8 0 TD 0.0053 Tc 3.5505 Tw (The frameworks of the IASC, the FASB, the United Kingdom) Tj0 -10.08 TD 0.005 Tc 1.0241 Tw (Accounting Standards Board, the South African Institute and CICA) TjT* 0.0051 Tc 0.4307 Tw (indicate that in applying the general recognition criteria, revenues or) TjT* 0.0047 Tc 2.4524 Tw (their equivalent would need to be "earned" or "realised" $or that) TjT* 0.0041 Tc 1.0984 Tw ("performance" would need to have occurred$ before they qualify for) TjT* 0.0052 Tc 0.6939 Tw (recognition in the operating statement. Those frameworks generally) Tj-28.8 -29.52 TD 0 Tc 0.0091 Tw ( ) Tj79.2 0 TD ( ) TjET142.08 218.64 144 0.48 re fBT142.08 211.2 TD/F0 7.92 Tf0.12 Tc 0 Tw (4) Tj13.44 -3.12 TD -0.0887 Tc 0.1816 Tw (Chapter 4 of the United Kingdom Accounting Standards Board's Disc) Tj217.92 0 TD -0.0689 Tc 0.3217 Tw (ussion Draft Statement of) Tj-216.96 -7.92 TD -0.0907 Tc 1.689 Tw (Principles uses the term "sufficient evidence" rather than "probable benefit/sacrifice" in its) Tj0 -7.92 TD -0.0916 Tc -0.0555 Tw (general recognition criteria $paragraph 4$.) TjETendstreamendobj133 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj134 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (68) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.005 Tc 1.2041 Tw (do not define those terms. However, Chapter 4 of the draft United) Tj0 -10.08 TD 0.005 Tc 0.0041 Tw (Kingdom framework states that:) Tj14.4 -10.08 TD 0.0061 Tc 0 Tw ("gains) Tj25.68 3.12 TD /F0 7.92 Tf0.12 Tc (5) Tj4.08 -3.12 TD /F0 10.08 Tf0.0056 Tc 0.2035 Tw ( ... must have been earned ) Tj109.92 0 TD /F3 10.08 Tf2.8891 Tc 0 Tw (-) Tj5.52 0 TD /F0 10.08 Tf0.0056 Tc 0.4835 Tw ( i.e. they must not belong to a) Tj-145.2 -10.08 TD 0.0041 Tc 1.205 Tw (future period $and$ ...) Tj0 Tc 0.0091 Tw ( ) Tj94.56 0 TD /F2 10.08 Tf0.0044 Tc 1.2527 Tw (there is no material transaction, contract) Tj-94.56 -10.08 TD 0.004 Tc 0.5251 Tw (or other event that must occur before the change in the assets or) Tj0 -10.08 TD 0.0042 Tc 1.349 Tw (liabilities of the entity inherent in the gain will have occurred) Tj264.48 0 TD /F0 10.08 Tf0.0077 Tc 0 Tw (") Tj-264.48 -10.08 TD 0.0026 Tc 0.0065 Tw ($paragraph 55$;) Tj-14.4 -20.16 TD 0.0059 Tc 0.0032 Tw (and FASB Concepts Statement No. 5 states that:) Tj14.4 -20.16 TD 0.005 Tc 0.2441 Tw ("... recognition of revenues and ga) Tj140.4 0 TD 0.0059 Tc 0.4232 Tw (ins ... involves consideration of) Tj-140.4 -10.08 TD 0.0045 Tc 0.5806 Tw (two factors, $a$ being realized or realizable and $b$ being earned,) Tj0 -10.08 TD 0.0059 Tc 2.5899 Tw (with sometimes one and sometimes the other being the more) TjT* 0.0053 Tc 0.0038 Tw (important consideration.) Tj0 -20.16 TD 0.0065 Tc 0 Tw (a.) Tj28.8 0 TD 0.0048 Tc 0.9943 Tw (... Revenues and gains are realized when products $goods) Tj-14.4 -10.08 TD 0.0051 Tc 1.624 Tw (or services$, merchandise, or other assets are exchanged for) Tj0 -10.08 TD 0.0055 Tc 1.9957 Tw (cash or claims to cash. Revenues and gains are realizable) TjT* 0.0049 Tc 0.5909 Tw (when related assets received or held are readily convertible to) TjT* 0.0058 Tc 0.0033 Tw (known amounts of cash or claims to cash ...) Tj-14.4 -20.16 TD 0.0055 Tc 0 Tw (b.) Tj14.4 0 TD 0.0058 Tc 0.7233 Tw (... An entity's revenue-earni) Tj114.72 0 TD 0.0049 Tc 0.7842 Tw (ng activities involve delivering or) Tj-114.72 -10.08 TD 0.0048 Tc 1.9243 Tw (producing goods, rendering services, or other activities that) Tj0 -10.08 TD 0.0051 Tc 4.9411 Tw (constitute its ongoing major or central operations, and) TjT* 0.0052 Tc 1.044 Tw (revenues are considered to have been earned when the entity) TjT* 0.0056 Tc 0.9369 Tw (has substantially accomplished what it must do to be entitled) TjT* 0.0055 Tc 0.6703 Tw (to the benefits represented by the revenues. Gains commonly) TjT* 0.0054 Tc 3.2137 Tw (result from transactions and other events that involve no) TjT* 0.005 Tc 0.8441 Tw ("earning process", and for recognizing gains, being earned is) TjT* 0.0054 Tc 1.9237 Tw (generally less significant than being realized or realizable.") TjT* 0.0023 Tc 0.0069 Tw ($paragraph 83$) Tj-57.6 -20.16 TD 0.001 Tc 0 Tw (A28) Tj28.8 0 TD 0.0043 Tc 2.4849 Tw (Chapter 4 of the draft United Kingdom framework also provides) Tj0 -10.08 TD 0.0054 Tc 2.7877 Tw (guidance on the meaning of "realised", in terms of either being) TjT* 0.0061 Tc 1.953 Tw (measurable with sufficient reliability $which is consistent with the) TjT* 0.0052 Tc 0.2439 Tw (recognition criteria in SAC 4$; resulting from a change in an asset or) TjT* 0.0055 Tc 0.5759 Tw (liability of a type not held for continuing use in the business and the) TjT* 0.0052 Tc 0.5559 Tw (resultant asset or liability is readily convertible to known amounts of) TjT* 0.005 Tc 0.5081 Tw (cash or cash equivalents; or resulting from a liability expiring, being) TjT* 0.0045 Tc 0.0046 Tw (cancelled or otherwise ceasing to exist $paragraph 55\(b$\).) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A29) Tj28.8 0 TD 0.0063 Tc 3.2728 Tw (This Statement includes commentary that is consistent with the) Tj0 -10.08 TD 0.005 Tc 4.8727 Tw (general meaning of the abovementioned guidance in overseas) TjT* 0.0053 Tc 1.5878 Tw (frameworks. Paragraph 130 of this Statement sets out tests which) Tj-28.8 -15.12 TD 0 Tc 0.0091 Tw ( ) Tj79.2 0 TD ( ) TjET142.08 202.8 144 0.48 re fBT142.08 195.36 TD/F0 7.92 Tf0.12 Tc 0 Tw (5) Tj14.4 -3.12 TD -0.0845 Tc -0.0626 Tw (Gains are the equivalent concept to revenues in the draft United Kingdom framework.) TjETendstreamendobj135 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj136 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (69) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0057 Tc 3.4595 Tw (will be useful in many situations in identifying whether, for a) Tj0 -10.08 TD 0.0049 Tc 0.2202 Tw (transaction involving the provision of goods and services, it would be) TjT* 0.0051 Tc 4.0574 Tw (probable that an inflow of future economic benefits will have) TjT* 0.0048 Tc 0.6763 Tw (occurred and will be capable of being measured reliably. Consistent) TjT* 0.0059 Tc 0.7232 Tw (with the explicit tests in some overseas frameworks, the tests set out) TjT* 0.0043 Tc 0.0048 Tw (in paragraph 130 include the completion of performance.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A30) Tj28.8 0 TD 0.0054 Tc 2.8837 Tw (These tests are set out as indicative criteria rather than as pre-) Tj0 -10.08 TD 0.0054 Tc 3.7718 Tw (requisites for an item to satisfy the criteria for recognition as) TjT* 0.0051 Tc 5.4898 Tw (revenues. However, submissions received on the superseded) TjT* 0.0059 Tc 2.0947 Tw (Statement included comments that notions of earnings, realisation) TjT* 0.0049 Tc 4.0603 Tw (and performance need to be elevated to the status of explicit) TjT* 0.0051 Tc 0.184 Tw (recognition criteria, or that more stringent recognition criteria should) TjT* 0.005 Tc 0.0042 Tw (be specified for the recognition of revenues.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A31) Tj28.8 0 TD 0.0055 Tc 3.9036 Tw (Consistent with the general recognition criteria adopted in the) Tj0 -10.08 TD 0.0056 Tc 0.0035 Tw (overseas frameworks, the reissued Statement retains the characteristic) TjT* 0.0055 Tc 0.8197 Tw (of symmetry between the recognition criteria for each element. The) TjT* 0.0051 Tc 0.7506 Tw (Boards chose not to adopt a conservative bias through establishment) TjT* 0.0055 Tc 2.1396 Tw (in this Statement of more stringent criteria for the recognition of) TjT* 0.0053 Tc 0.0039 Tw (revenues, for the following reasons:) Tj0 -20.16 TD 0.0035 Tc 0 Tw ($a$) Tj28.8 0 TD 0.0054 Tc 5.6037 Tw (it would conflict with the qualitative characteris) Tj227.76 0 TD 0.0055 Tc 5.7636 Tw (tic of) Tj-227.76 -10.08 TD 0.0054 Tc 0.1637 Tw (reliability, which requires ) Tj107.76 0 TD /F2 10.08 Tf0.0047 Tc 0.2444 Tw (inter alia) Tj37.92 0 TD /F0 10.08 Tf0.0059 Tc 0.4032 Tw ( that financial information) Tj-145.68 -10.08 TD 0.0053 Tc 0.6439 Tw (is neutral. Accordingly, it would conflict with the qualitative) Tj0 -10.08 TD 0.0053 Tc 0.0039 Tw (characteristics set out in SAC 3 and in overseas frameworks;) Tj-28.8 -20.16 TD 0.0029 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0052 Tc 0.4839 Tw (it would conflict with the Boards' goal of balance between the) Tj0 -10.08 TD 0.0053 Tc 1.5638 Tw (quality of information reported in the statement of financial) TjT* 0.0055 Tc 0.0036 Tw (position and in the operating statement; and) Tj-28.8 -20.16 TD 0.0042 Tc 0 Tw ($c$) Tj28.8 0 TD 0.0051 Tc 1.0973 Tw (it would specify two-tier criteria for the recognition of assets) Tj0 -10.08 TD 0.0052 Tc 1.5639 Tw (and liabilities instead of the general criterion of probability.) TjT* 0.0051 Tc 1.364 Tw (That is, the criteria for the recognition and derecognition of) TjT* 0.0051 Tc 3.214 Tw (assets and liabilities would differ according to whether a) TjT* 0.0041 Tc 0.485 Tw (revenue or expense is involved. Such an approach would add) TjT* 0.0047 Tc 5.2501 Tw (considerable complexity to the concepts and would be) TjT* 0.0059 Tc 7.0032 Tw (inconsistent with the recognition criteria in overseas) TjT* 0.0056 Tc 2.5102 Tw (frameworks. It would also conflict with the comments in) TjT* 0.0039 Tc 3.1786 Tw (paragraph 24 of Chapter 4 of the draft United Kingdom) TjT* 0.0032 Tc 0.0059 Tw (framework $quoted in paragraph A26$.) Tj-57.6 -20.16 TD 0.001 Tc 0 Tw (A32) Tj28.8 0 TD 0.0053 Tc 0.0838 Tw (Specification of particular tests, such as a need for "realisatio) Tj248.16 0 TD 0.0071 Tc 0.242 Tw (n", so as) Tj-248.16 -10.08 TD 0.0047 Tc 0.6978 Tw (to ensure prudent application of the recognition criteria for revenues) Tj0 -10.08 TD 0.0046 Tc 0.0045 Tw (may be ineffective or inappropriate because:) TjETendstreamendobj137 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj138 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (70) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0035 Tc 0 Tw ($a$) Tj28.8 0 TD 0.0051 Tc 3.34 Tw (it is difficult to specify tests that are appropriate for all) Tj0 -10.08 TD 0.0053 Tc 0.0038 Tw (revenues and all types of entity;) Tj-28.8 -20.16 TD 0.0029 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0044 Tc 0.0527 Tw (of the lack of generally agreed or clearly understood notions of) Tj0 -10.08 TD 0.0056 Tc 0.0036 Tw ("earning" or "realisation";) Tj-28.8 -20.16 TD 0.0042 Tc 0 Tw ($c$) Tj28.8 0 TD 0.0058 Tc 1.6033 Tw (of the limitations of notions of "earning" or "realisation" in) Tj0 -10.08 TD 0.0049 Tc 1.3908 Tw (ensuring that revenues are not dependent on the outcome of) TjT* 0.0047 Tc 0.0525 Tw (unknown future events. For example, as is noted in paragraph) TjT* 0.0044 Tc 2.199 Tw (A28 above, the draft United Kingdom framework indicates) TjT* 0.0053 Tc 2.0198 Tw (that "gains" on assets not held for continued use would be) TjT* 0.0053 Tc 3.8438 Tw (realised where the asset is readily convertible to known) TjT* 0.0051 Tc 2.3507 Tw (amounts of cash or cash equivalents at the reporting date.) TjT* 0.0049 Tc 0.7722 Tw (However, the entity may be exposed to the risk of subsequent) TjT* 0.005 Tc 0.3341 Tw (losses arising from price changes $for example, on marketable) TjT* 0.0048 Tc 2.0843 Tw (securities$ and to ongoing credit risk in respect of debtors.) TjT* 0.0062 Tc 0.383 Tw (For reasons such as these, it is unlikely that any basis $that is,) TjT* 0.005 Tc 4.2212 Tw (whether neutral or conservative$ on which revenues are) TjT* 0.0044 Tc 1.959 Tw (recognised would enable reported revenues and expenses to) TjT* 0.0057 Tc 1.5119 Tw (provide sufficient information for assessments of the entity's) TjT* 0.0053 Tc 2.7771 Tw (prospects. That is, information about the risks facing an) TjT* 0.0053 Tc 0.0223 Tw (entity is more likely to be useful to users if it is disclosed about) TjT* 0.0059 Tc 2.2505 Tw (the entity's assets by way of note, rather than by the non-) TjT* 0.0049 Tc 0.0042 Tw (recognition of revenues;) Tj-28.8 -20.16 TD 0.0022 Tc 0 Tw ($d$) Tj28.8 0 TD 0.0049 Tc 1.0842 Tw (pervasive criteria that revenues must be "earned" before they) Tj0 -10.08 TD 0.0042 Tc 2.615 Tw (can qualify for recognition would be inappropriate for the) TjT* 0.0049 Tc 0.2042 Tw (recognition of contributions and other non-reciprocal transfers) TjT* 0.0054 Tc 1.3904 Tw (to not-for-profit entities. This is because notions of earning) TjT* 0.0055 Tc 0.8916 Tw (are not useful when applied to entities whose objective is not) TjT* 0.0054 Tc 0.0637 Tw (the generation of profit. In this regard, it is relevant that three) TjT* 0.0047 Tc 0.6711 Tw (of the five frameworks which require revenues to be "earned") TjT* 0.0046 Tc 5.2445 Tw (or "realised" before they qualify for recognition) Tj222.96 3.12 TD /F0 7.92 Tf0.12 Tc 0 Tw (6) Tj4.08 -3.12 TD /F0 10.08 Tf0.0044 Tc 5.2847 Tw ( were) Tj-227.04 -10.08 TD 0.0052 Tc 0.0039 Tw (developed for business entities only) Tj143.28 3.12 TD /F0 7.92 Tf0.12 Tc 0 Tw (7) Tj4.08 -3.12 TD /F0 10.08 Tf0.0048 Tc 0.0043 Tw (; and) Tj-176.16 -20.16 TD 0.0042 Tc 0 Tw ($e$) Tj28.8 0 TD 0.0049 Tc 1.3071 Tw (recognition criteria based on "realisation" of revenues would) Tj0 -10.08 TD 0.0047 Tc 6.5444 Tw (pre-empt future decisions to be made in respect of) TjT* 0.0055 Tc 4.2436 Tw (measurement concepts, because they imply the exclusive) TjT* 0.0047 Tc 9.0284 Tw (application of transaction-based models for revenue) TjT* 0.0053 Tc 0 Tw (recognition.) Tj-57.6 -37.44 TD 0 Tc 0.0091 Tw ( ) Tj79.2 0 TD ( ) TjET142.08 220.8 144 0.48 re fBT142.08 209.52 TD/F0 7.92 Tf0.12 Tc 0 Tw (6) Tj4.08 -3.12 TD 0 Tc -0.1471 Tw ( ) Tj10.32 0 TD -0.0854 Tc -0.0617 Tw (Those are the frameworks of the IASC, South Africa and the United Kingdom.) TjET142.08 204.96 257.76 0.48 re f462.96 204.48 0.72 12.24 re f462.96 198.72 0.72 5.76 re fBT142.08 195.36 TD0.12 Tc 0 Tw (7) Tj14.4 -3.12 TD -0.075 Tc -0.0722 Tw (The treatment of contributions is discussed in paragraphs A77-A94 below.) TjETendstreamendobj139 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj140 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (71) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.56 TD 0.001 Tc 0 Tw (A33) Tj28.8 0 TD 0.0053 Tc 3.0758 Tw (While some types of revenue may be the subject of uncertainty) Tj0 -10.08 TD 0.0047 Tc 0.0044 Tw (regarding the outcome of unknown future events, practical difficulties) TjT* 0.0055 Tc 1.0836 Tw (also arise in applying the recognition criteria to the other elements.) TjT* 0.005 Tc 0.2441 Tw (For example, it may be difficult to assess the recoverable amount of a) TjT* 0.0047 Tc 0.8335 Tw (non-current asset or the value of work in progress on a construction) TjT* 0.0053 Tc 1.4172 Tw (contract, in accordance with the measurement basis adopted by the) TjT* 0.0053 Tc 1.0598 Tw (entity, or to assess the depreciation expense in respect of long-lived) TjT* 0.0058 Tc 4.1366 Tw (assets. It would be inconsistent to establish different general) TjT* 0.0054 Tc 0.4237 Tw (concepts for the recognition of revenues so as to deal with the effects) TjT* 0.0051 Tc 0.564 Tw (of uncertainty on the recognition of revenues, while disregarding the) TjT* 0.0057 Tc 0.0035 Tw (effect of uncertainty on the recognition of the other elements.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A34) Tj28.8 0 TD 0.0053 Tc 0.1347 Tw (To deal with the effects of uncertainty on the recognition of revenues,) Tj0 -10.08 TD 0.0046 Tc 3.9346 Tw (Accounting Standards may be developed which explain how a) TjT* 0.0048 Tc 1.2044 Tw (probable inflow of future economic benefits should be identified, or) TjT* 0.0056 Tc 1.3369 Tw (which specify that because of the difficulties of obtaining sufficient) TjT* 0.005 Tc 1.1441 Tw (evidence for recognition of particular revenues, more stringent tests) TjT* 0.005 Tc 0.5026 Tw (need to be met for their recognition. However, the Boards are of the) TjT* 0.005 Tc 0.5278 Tw (view that it would be inappropriate to include these policy aspects in) TjT* 0.0047 Tc 0.3044 Tw (the general concepts for the recognition of revenues. To do so would) TjT* 0.0048 Tc 2.8577 Tw (pre-empt the Boards' due process in respect of particular issues.) TjT* 0.0048 Tc 3.6943 Tw (Moreover, it would impair the understandability of the general) TjT* 0.0062 Tc 0.0029 Tw (concepts and give rise to inconsistencies within the Statement.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A35) Tj28.8 0 TD 0.0053 Tc 0.8679 Tw (For these reasons, the Boards have decided to retain the recognition) Tj0 -10.08 TD 0.0049 Tc 2.2442 Tw (criteria for revenues from the superseded Statement, and to leave) TjT* 0.005 Tc 0.9374 Tw (practical tests for revenue recognition to the domain of commentary) TjT* 0.0045 Tc 0.6179 Tw (and, where appropriate, Accounting Standards. The Boards are also) TjT* 0.0059 Tc 2.4752 Tw (of the view that the difference between this Statement and some) TjT* 0.0051 Tc 1.828 Tw (overseas frameworks in this regard is a matter of emphasis rather) TjT* 0.0055 Tc 0.0037 Tw (than a fundamental difference.) Tj-28.8 -30.24 TD /F2 10.08 Tf0.0049 Tc 0.0042 Tw (Specific Issues) TjET142.08 314.88 59.28 0.48 re fBT142.08 296.4 TD/F0 10.08 Tf0.001 Tc 0 Tw (A36) Tj28.8 0 TD 0.0057 Tc 6.1749 Tw (The following discussion examines specific issues raised in) Tj0 -10.08 TD 0.0054 Tc 0.3237 Tw (submissions on the superseded Statement and other topical aspects of) TjT* 0.0068 Tc 0.0023 Tw (the Statement.) Tj0 -20.16 TD /F2 10.08 Tf0.0039 Tc 0 Tw (Performance) TjET170.88 254.4 52.32 0.48 re fBT142.08 235.92 TD/F0 10.08 Tf0.001 Tc (A37) Tj28.8 0 TD 0.0043 Tc 2.7048 Tw (For profit-seeking entities, a primary purpose of general purpose) Tj0 -10.08 TD 0.0052 Tc 0.5106 Tw (financial reports is the provision of relevant and reliable information) TjT* 0.0053 Tc 3.9505 Tw (about the profitability of the entity. Statement of Accounting) TjT* 0.0051 Tc 0.3941 Tw (Concepts SAC 2 "Objective of General Purpose Financial Reporting") TjT* 0.0059 Tc 0.8672 Tw (states that in the case of profit-seeking entities, "investors and other) TjT* 0.005 Tc 0.6761 Tw (resource providers will want to know whether the entity is operating) TjETendstreamendobj141 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj142 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (72) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0051 Tc 0.6974 Tw (profitably and generating favourable cash flows in the process, since) Tj0 -10.08 TD 0.0057 Tc 4.5935 Tw (their decisions relate to amounts, timing and uncertainties of) TjT* 0.0041 Tc 0.005 Tw (expected cash flows" $paragraph 21$.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A38) Tj28.8 0 TD 0.0051 Tc 1.984 Tw (Although the relationship between profit of a profit-seeking entity) Tj0 -10.08 TD 0.005 Tc 0.7241 Tw (and compensation received by owners is complex and often indirect,) TjT* 0.0047 Tc 1.7564 Tw (profit is the basic source of compensation to owners for providing) TjT* 0.0049 Tc 0.1133 Tw (equity or risk capital to such an entity. Profitable operations generate) TjT* 0.0056 Tc 1.4871 Tw (assets that can be distributed to owners or reinvested in the entity,) TjT* 0.005 Tc 2.1042 Tw (and investors' expectations about both distributions to owners and) TjT* 0.0051 Tc 3.364 Tw (reinvested profit may affect market prices of the entity's equity) TjT* 0.0052 Tc 0.5739 Tw (securities. Expectations that owners will be adequately compensated) TjT* -0.0211 Tc 1.4223 Tw (\226 that they will receive returns) Tj0 Tc 0.0091 Tw ( ) Tj134.64 0 TD /F2 10.08 Tf0 Tw (on) Tj10.08 0 TD /F0 10.08 Tf0.0061 Tc 1.443 Tw ( their investments commensurate) Tj-144.72 -10.08 TD -0.0064 Tc 0.2001 Tw (with their risks \226 are as necessary to attract equity capital to an entity) Tj0 -10.08 TD 0.0051 Tc 3.6573 Tw (as are expectations of wages and salaries to attract employees') TjT* 0.0052 Tc 2.1939 Tw (services, expectations of repayments of borrowing with interest to) TjT* 0.0046 Tc 1.8712 Tw (attract borrowed funds, or expectations of payments on account to) TjT* 0.0053 Tc 0.0038 Tw (attract raw materials or merchandise.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A39) Tj28.8 0 TD 0.0051 Tc 3.6041 Tw (Some commentators have argued that the superseded Statement) Tj0 -10.08 TD 0.0056 Tc 1.2035 Tw (placed insufficient emphasis on the provision of information that is) TjT* 0.0054 Tc 4.9751 Tw (useful for assessing the profitability of profit-seeking entities.) TjT* 0.0053 Tc 2.7938 Tw (Concerns had been expressed that the superseded Statement was) TjT* 0.006 Tc 0.6272 Tw (inconsistent with the matching of revenues and expenses, and that it) TjT* 0.0055 Tc 2.7876 Tw (placed a bias toward the statement of financial position. These) TjT* 0.0043 Tc 0.0049 Tw (aspects are discussed in paragraphs A40-A59.) Tj0 -20.16 TD /F2 10.08 Tf0.0027 Tc 0 Tw (Matching) TjET170.88 375.36 38.64 0.48 re fBT199.68 356.88 TD0.0051 Tc 0.0041 Tw (Profit-seeking entities) TjET199.68 355.2 89.28 0.48 re fBT142.08 336.72 TD/F0 10.08 Tf0.001 Tc 0 Tw (A40) Tj28.8 0 TD 0.0047 Tc 5.0444 Tw (The reporting of relevant and reliable information about the) Tj0 -10.08 TD 0.0051 Tc 3.754 Tw (profitability of a profit-seeking entity will typically involve the) TjT* 0.0051 Tc 0.796 Tw (matching of revenues and expenses in an appropriate manner. This) TjT* 0.0049 Tc 3.4709 Tw (could include the following types of matching of revenues and) TjT* 0.0058 Tc 0 Tw (expenses:) Tj0 -20.16 TD 0.0035 Tc ($a$) Tj28.8 0 TD 0.0054 Tc 0.9157 Tw (matching of expenses with revenues wher) Tj173.52 0 TD 0.0063 Tc 0.9629 Tw (e those items result) Tj-173.52 -10.08 TD 0.0056 Tc 0.0302 Tw (directly and jointly from the same transactions or other events;) Tj0 -10.08 TD 0.0051 Tc 2.434 Tw (for example, simultaneous recognition of sales and cost of) TjT* 0.0046 Tc 1.3545 Tw (goods sold, and recognition of project revenues arising from) TjT* 0.0051 Tc 0.34 Tw (performance under construction contracts simultaneously with) TjT* 0.005 Tc 0.0041 Tw (recognition of project expenses;) Tj-28.8 -20.16 TD 0.0029 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0048 Tc 2.8501 Tw (matching of revenues with progressive performance by an) Tj0 -10.08 TD 0.0048 Tc 3.4243 Tw (entity over a period; for example, recognition of interest) TjETendstreamendobj143 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj144 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (73) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-103.2 484.56 TD 0.0045 Tc 0.6712 Tw (revenues by lenders over the period of credit, and recognition) Tj0 -10.08 TD 0.0046 Tc 0.0046 Tw (of insurance premiums by insurers over the period of risk; and) Tj-28.8 -20.16 TD 0.0042 Tc 0 Tw ($c$) Tj28.8 0 TD 0.0053 Tc 0.9981 Tw (matching of expenses with the entity's productive operations;) Tj0 -10.08 TD 0.005 Tc 1.6499 Tw (for example, the systematic recognition of depreciation over) TjT* 0.0053 Tc 3.5439 Tw (the periods during which the entity consumes the future) TjT* 0.0056 Tc 1.5035 Tw (economic benefits embodied in its long-lived assets. Where) TjT* 0.0049 Tc 1.1743 Tw (expenses are not related directly to particular revenues, their) TjT* 0.005 Tc 1.2941 Tw (recognition will largely be independent of the recognition of) TjT* 0.0052 Tc 0.9373 Tw (revenues. However, a matching of those expenses will occur) TjT* 0.0058 Tc 2.0566 Tw (in the sense that they will be recognised concurrently with) TjT* 0.0051 Tc 0.9641 Tw (revenues generated by the entity's operations in the reporting) TjT* 0.0036 Tc 0 Tw (period.) Tj-57.6 -20.16 TD 0.001 Tc (A41) Tj28.8 0 TD 0.0053 Tc 1.9478 Tw (Matching of revenues and expenses in the ways outlined above is) Tj0 -10.08 TD 0.0061 Tc 3.963 Tw (generally consistent with this Statement. Application of these) TjT* 0.006 Tc 1.2565 Tw (matching techniques will sometimes result in "deferral" of items in) TjT* 0.0055 Tc 2.6436 Tw (the statement of financial position and subsequent recognition of) TjT* 0.0047 Tc 0.6445 Tw (revenues and/or expenses during the reporting periods to which they) TjT* 0.0061 Tc 0.075 Tw (relate. Whether such deferrals are consistent with this Statement will) TjT* 0.0058 Tc 1.5393 Tw (depend on whether they meet the definitions of assets or liabilities) TjT* 0.0054 Tc 1.8758 Tw (and the criteria for their recognition. Some commentators on the) TjT* 0.0053 Tc 3.0896 Tw (superseded Statement had interpreted the Statement as generally) TjT* 0.0045 Tc 4.0046 Tw (precluding the deferral of prepayments made $such as rent or) TjT* 0.0048 Tc 0.511 Tw (insurance paid in advance$ or subscriptions received in advance, and) TjT* 0.0042 Tc 3.2277 Tw (as generally precluding provisioning for any future expenditures) TjT* 0.0054 Tc 0.7538 Tw ($such as "provisions" for employee entitlements and "provisions" for) TjT* 0.0054 Tc 1.9478 Tw (income tax$. In fact, application of this Statement would involve) TjT* 0.0062 Tc 0.867 Tw (recognition of these items as assets and liabilities where they satisfy) TjT* 0.0055 Tc 0.0036 Tw (the definitions and recognition criteria.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A42) Tj28.8 0 TD 0.0053 Tc 2.7239 Tw (While application of this Statement would generally give rise to) Tj0 -10.08 TD 0.0054 Tc 0.9104 Tw (matching of revenues and expenses, there would be instances where) TjT* 0.0054 Tc 0.9904 Tw (matching will not be achievable if relevant and reliable information) TjT* 0.0052 Tc 0.4439 Tw (is to be reported. For example, there could be instances where costs,) TjT* 0.0052 Tc 4.7239 Tw (such as research and development costs, are incurred in the) TjT* 0.0051 Tc 1.2477 Tw (expectation of future benefits but it is not possible, at the reporting) TjT* 0.0056 Tc 0.309 Tw (date, to establish that it is probable that future economic benefits will) TjT* 0.0055 Tc 0.8196 Tw (eventuate. In those circ*mstances, the costs would be recognised as) TjT* 0.0049 Tc 1.4442 Tw (expenses prior to recognition of any revenues which eventually are) TjT* 0.005 Tc 0.0041 Tw (generated by a successful outcome from the activity concerned.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A43) Tj28.8 0 TD 0.0054 Tc 0.5797 Tw (Although application of the concepts set out in this Statement would) Tj0 -10.08 TD 0.0056 Tc 3.5769 Tw (typically give rise to matching of revenues with expenses, this) TjT* 0.0055 Tc 0.5077 Tw (Statement does not employ a process of "matching" as a determinant) TjT* 0.0059 Tc 3.0752 Tw (of how or when the elements of financial statements should be) TjT* 0.0048 Tc 0.7776 Tw (identified and recognised. Adoption of "matching" as an overriding) TjETendstreamendobj145 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj146 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (74) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0056 Tc 0.4595 Tw (concept in the identification of the items which should be recognised) Tj0 -10.08 TD 0.0061 Tc 0.513 Tw (in financial statements is incompatible with the explicit specification) TjT* 0.0059 Tc 0.7432 Tw (of the nature of each of the elements of financial statements and the) TjT* 0.0059 Tc 2.4033 Tw (circ*mstances in which those elements should be recognised. In) TjT* 0.0052 Tc 0.4599 Tw (effect, it would endorse the application of the frameworks implicit in) TjT* 0.0048 Tc 0.0044 Tw (the thinking of preparers in preference to an explicit framework.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A44) Tj28.8 0 TD 0.0057 Tc 1.2834 Tw (Some matching techniques smooth the effects of events of different) Tj0 -10.08 TD 0.0049 Tc 0.6151 Tw (reporting periods in a manner that reflects the preparer's view of the) TjT* 0.005 Tc 2.5908 Tw (long-term performance of the entity and reduces the volatility of) TjT* 0.0054 Tc 1.337 Tw (reported results, but which involves recognition in the statement of) TjT* 0.0061 Tc 2.5097 Tw (financial position of items which satisfy neither the definition of) TjT* 0.006 Tc 2.6912 Tw (assets nor the definition of liabilities. These techniques are not) TjT* 0.0059 Tc 0.4112 Tw (consistent with this Statement. Examples of these items are deferred) TjT* 0.0054 Tc 1.8552 Tw (exchange losses, provisions for uninsured future losses $sometimes) TjT* 0.0047 Tc 1.8215 Tw (described as self-insurance provisions$ and provisions for expected) TjT* 0.0058 Tc 2.59 Tw (future losses on unprofitable business segments. Implicit in this) TjT* 0.0055 Tc 0.0472 Tw (notion of matching is a view that the operating statement should have) TjT* 0.0055 Tc 3.097 Tw (primacy over the statement of financial position. However, the) TjT* 0.005 Tc 2.6441 Tw (Boards are of the view that in order to achieve the objective of) TjT* 0.0049 Tc 0.2442 Tw (general purpose financial reporting, both the operating statement and) TjT* 0.0052 Tc 3.6939 Tw (the statement of financial position should provide relevant and) TjT* 0.0054 Tc 2.6703 Tw (reliable information. In addition, these allocations do not foster) TjT* 0.005 Tc 1.1241 Tw (reliable reporting and confidence in the quality of financial reports,) TjT* 0.005 Tc 0 Tw (because:) Tj0 -20.16 TD 0.0035 Tc ($a$) Tj28.8 0 TD 0.0055 Tc 1.1437 Tw (they cause operating statements to reflect the expectations of) Tj0 -10.08 TD 0.0049 Tc 7.1243 Tw (preparers rather than economic phenomena, and are) TjT* 0.0055 Tc 0.0037 Tw (inherently unverifiable;) Tj-28.8 -20.16 TD 0.0029 Tc 0 Tw ($b$) Tj28.8 0 TD 0.005 Tc 4.667 Tw (anticipated long-term trends in profitability or in other) Tj0 -10.08 TD 0.0047 Tc 3.9644 Tw (measures of performance can only be confirmed after a) TjT* 0.0049 Tc 6.1642 Tw (substantial period has elapsed and resource allocation) TjT* 0.005 Tc 0.0042 Tw (decisions have already been made; and) Tj-28.8 -20.16 TD 0.0042 Tc 0 Tw ($c$) Tj28.8 0 TD 0.0056 Tc 0.0035 Tw (they may obscure the relative riskiness of different businesses.) Tj0 -20.16 TD /F2 10.08 Tf0.0042 Tc 0.0049 Tw (Periodic reporting) TjET199.68 274.56 75.36 0.48 re fBT142.08 256.08 TD/F0 10.08 Tf0.001 Tc 0 Tw (A45) Tj28.8 0 TD 0.0048 Tc 0.9207 Tw (For the reasons outlined below, the periodic nature of reporting is a) Tj0 -10.08 TD 0.0057 Tc 2.5474 Tw (constraint on the extent to which revenues can be matched with) TjT* 0.0055 Tc 0.7536 Tw (expenses in conventional financial reports. The operating statement) TjT* 0.0048 Tc 1.6309 Tw (reports the financial performance of an entity during the reporting) TjT* 0.0053 Tc 1.0118 Tw (period. Users will frequently be concerned with the implications of) TjT* 0.0044 Tc 0.3248 Tw (revenues and expenses recognised during the reporting period for the) TjT* 0.0053 Tc 0.1959 Tw (likely financial performance of the entity in the future, particularly in) TjT* 0.0052 Tc 0.2973 Tw (respect of the core business or essential service-delivery operations of) TjETendstreamendobj147 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj148 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (75) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0055 Tc 0.7476 Tw (the entity. For profit-seeking entities, some users may be concerned) Tj0 -10.08 TD 0.0057 Tc 0.2091 Tw (with assessing "maintainable profits"; for not-for-profit entities, users) TjT* 0.0055 Tc 1.5156 Tw (may be concerned with assessing the likely costs of future services) TjT* 0.0053 Tc 0.7039 Tw (and recoveries of those costs in the form of revenues. An important) TjT* 0.0058 Tc 2.4034 Tw (role of operating statements is to confirm whether the entity has) TjT* 0.0055 Tc 0.7476 Tw (performed as expected and to assist users to refine their assessments) TjT* 0.0044 Tc 0.0047 Tw (of likely future performance.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A46) Tj28.8 0 TD 0.005 Tc 1.9927 Tw (Despite the interdependence of the abovementioned predictive and) Tj0 -10.08 TD 0.0054 Tc 1.7437 Tw (confirmatory roles of operating statements, there is normally some) TjT* 0.0056 Tc 1.1769 Tw (tension between those roles. To meet the confirmatory information) TjT* 0.0047 Tc 4.2711 Tw (needs of users in the context of periodic reporting, operating) TjT* 0.0058 Tc 2.27 Tw (statements report the effects of transactions and other events that) TjT* 0.0046 Tc 0.2685 Tw (occur within the reporting period, and exclude the expected effects of) TjT* 0.0053 Tc 1.6598 Tw (future transactions and other future events. These latter items are) TjT* 0.0049 Tc 0.6176 Tw (excluded irrespective of whether they are relevant to interpreting the) TjT* 0.0053 Tc 0.1478 Tw (implications of the current period's result for the entity's prospects, so) TjT* 0.005 Tc 4.3841 Tw (that reliable information is reported to enable comparisons of) TjT* 0.0051 Tc 1.6541 Tw (performance between entities and between reporting periods. This) TjT* 0.0057 Tc 1.3101 Tw (constraint on the items which are reported in operating statements,) TjT* 0.0051 Tc 4.174 Tw (and the inter-period variability of many entities' revenues and) TjT* 0.0057 Tc 0.1714 Tw (expenses, constrain the extent to which a "matching" of revenues and) TjT* 0.005 Tc 0.0041 Tw (expenses can be achieved in conventional periodic reports.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A47) Tj28.8 0 TD 0.0052 Tc 5.5582 Tw (The following example illustrates the constraints of periodic) Tj0 -10.08 TD 0.0052 Tc 0.593 Tw (reporting on the matching of revenues and expenses. An entity may) TjT* 0.0054 Tc 0.3504 Tw (recognise "unrealised" exchange gains or losses, based on changes in) TjT* 0.005 Tc 0.9642 Tw (the spot rate price applicable to its foreign currency monetary items) TjT* 0.0048 Tc 0.7003 Tw (during the reporting period. Where, for example, the movements in) TjT* 0.0051 Tc 1.2913 Tw (spot rates which gave rise to recognition of the unrealised gains or) TjT* 0.0051 Tc 0.2004 Tw (losses reverse after the reporting date, the effect of the reversal would) TjT* 0.005 Tc 0.3841 Tw (not be recognised until the next reporting period, because it is not an) TjT* 0.0045 Tc 0.9166 Tw (event of the current reporting period. Implicit in periodic reporting) TjT* 0.0056 Tc 0.5035 Tw (is the likely need for users to assess the implications of each period's) TjT* 0.0045 Tc 0.3046 Tw (reported result in the context of the results reported over a number of) TjT* 0.004 Tc 0.0051 Tw (reporting periods.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A48) Tj28.8 0 TD 0.0051 Tc 4.594 Tw (The tension between the predictive and confirmatory roles of) Tj0 -10.08 TD 0.0045 Tc 3.6646 Tw (operating statements discussed in paragraph A46 above can be) TjT* 0.0046 Tc 2.576 Tw (reduced substantially through separate disclosure of revenues and) TjT* 0.0053 Tc 4.9539 Tw (expenses of differing character $such as unrealised losses on) TjT* 0.005 Tc 0.8741 Tw (marketable securities held for sale, unusual and non-recurring items) TjT* 0.0054 Tc 0.8917 Tw (and restructuring charges$. This can assist users in interpreting the) TjT* 0.0053 Tc 1.3838 Tw (implications of the transactions and other events recognised during) TjT* 0.0054 Tc 1.6597 Tw (the reporting period. Similarly, to maximise the usefulness of the) TjT* 0.0057 Tc 3.5134 Tw (operating statement to assessments of performance, it might be) TjT* 0.0047 Tc 4.2445 Tw (argued that greater emphasis should be given to results from) TjETendstreamendobj149 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj150 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (76) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0049 Tc 0.4542 Tw (continuing operations, results excluding corrections of errors and the) Tj0 -10.08 TD 0.0051 Tc 0.9373 Tw (effects of changes in accounting policy, and results before abnormal) TjT* 0.0061 Tc 0.8431 Tw (items. Identification of certain items as meeting the definitions and) TjT* 0.0052 Tc 4.3772 Tw (recognition criteria for revenues and expenses set out in this) TjT* 0.0057 Tc 0.7474 Tw (Statement does not necessarily imply that those items would need to) TjT* 0.0049 Tc 0.7242 Tw (be included in the "bottom line" or primary performance measure in) TjT* 0.0051 Tc 2.724 Tw (the operating statement. The content and structure of operating) TjT* 0.0056 Tc 1.6356 Tw (statements will be addressed in the development of a Statement of) TjT* 0.005 Tc 0.0042 Tw (Accounting Concepts on the display of performance.) Tj28.8 -20.16 TD /F2 10.08 Tf0.0052 Tc 0.0039 Tw (Not-for-profit entities) TjET199.68 546.72 87.6 0.48 re fBT142.08 528.24 TD/F0 10.08 Tf0.001 Tc 0 Tw (A49) Tj28.8 0 TD 0.0052 Tc 3.6039 Tw (Not-for-profit entities have objectives which do not include the) Tj0 -10.08 TD 0.0045 Tc 1.1308 Tw (provision of goods or services at a profit, and users are likely to be) TjT* 0.0053 Tc 1.8038 Tw (interested in non-financial measures of performance in addition to) TjT* 0.0055 Tc 0.5236 Tw (the financial results reported by those entities. Users are likely to be) TjT* 0.0052 Tc 1.4679 Tw (interested in the volume and quality of services the entity provides) TjT* 0.0053 Tc 0.2838 Tw (and the entity's ability to continue to provide them. This will depend) TjT* 0.0059 Tc 1.3833 Tw (in part on the efficiency and effectiveness of the entity's use of the) TjT* 0.0042 Tc 5.0983 Tw (resources provided to it for the purpose of service delivery.) TjT* 0.006 Tc 0.3631 Tw (Information relevant to these assessments is likely to include the cost) TjT* 0.0039 Tc 0.0318 Tw (of goods and services provided during the reporting period $expenses$) TjT* 0.0054 Tc 2.9273 Tw (and the nature and extent of the entity's recoveries of that cost) TjT* 0.0049 Tc 0.0042 Tw (through the generation of revenues.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A50) Tj28.8 0 TD 0.0054 Tc 4.0571 Tw (Matching would occur in the application of this Statement to) Tj0 -10.08 TD 0.0052 Tc 5.6268 Tw (operating statements of not-for-profit entities. For example,) TjT* 0.0056 Tc 2.1636 Tw (consistent with profit-seeking entities, not-for-profit entities would) TjT* 0.005 Tc 0.4499 Tw (appropriately match expenses with the entity's productive operations;) TjT* 0.0052 Tc 1.3373 Tw (such as through the systematic recognition of depreciation over the) TjT* 0.0052 Tc 3.8739 Tw (periods during which the entity consumes the future economic) TjT* 0.0057 Tc 0.0034 Tw (benefits embodied in its long-lived assets.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A51) Tj28.8 0 TD 0.0048 Tc 2.2709 Tw (In addition, matching would occur where assets are consumed or) Tj0 -10.08 TD 0.0053 Tc 0.1239 Tw (liabilities incurred in the provision of services without charge and the) TjT* 0.0047 Tc 1.3353 Tw (cost of service delivery is recognised as services are provided. For) TjT* 0.0049 Tc 0.2709 Tw (example, matching would occur where the consumption of stores and) TjT* 0.0052 Tc 1.7739 Tw (supplies is recognised simultaneously with the related provision of) TjT* 0.0062 Tc 0 Tw (services.) Tj0 -20.16 TD /F2 10.08 Tf0.0033 Tc 0.0058 Tw (Balance sheet bias?) TjET170.88 244.32 81.12 0.48 re fBT142.08 225.84 TD/F0 10.08 Tf0.001 Tc 0 Tw (A52) Tj28.8 0 TD 0.0053 Tc 1.6839 Tw (It has been contended that the superseded Statement placed a bias) Tj0 -10.08 TD 0.0054 Tc 1.4704 Tw (toward the statement of financial position $or balance sheet$ rather) TjT* 0.0056 Tc 0.0035 Tw (than the operating statement because:) TjETendstreamendobj151 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj152 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (77) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0035 Tc 0 Tw ($a$) Tj28.8 0 TD 0.0053 Tc 1.7105 Tw (revenues and expenses were defined in terms of changes in) Tj0 -10.08 TD 0.0062 Tc 0.0029 Tw (assets and liabilities; and) Tj-28.8 -20.16 TD 0.0029 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0054 Tc 0.0381 Tw (the requirement that an item needed to ) Tj160.08 0 TD 0.006 Tc 0.2431 Tw (satisfy the definition of) Tj-160.08 -10.08 TD 0.0053 Tc 0.5711 Tw (assets, liability or equity if it was to qualify for recognition in) Tj0 -10.08 TD 0.0052 Tc 0.1839 Tw (the statement of financial position would have precluded some) TjT* 0.0047 Tc 1.4204 Tw (deferrals that previously have been made so as to report the) TjT* 0.0055 Tc 3.017 Tw (effect of certain events in the operating statement over a) TjT* 0.004 Tc 0.0051 Tw (number of reporting periods.) Tj-57.6 -20.16 TD 0.001 Tc 0 Tw (A53) Tj28.8 0 TD 0.0049 Tc 1.7581 Tw (As is noted in paragraph A44, the Boards are of the view that in) Tj0 -10.08 TD 0.0046 Tc 0.6712 Tw (order to achieve the objective of general purpose financial reporting,) TjT* 0.0058 Tc 1.0434 Tw (both the operating statement and the statement of financial position) TjT* 0.0047 Tc 1.1511 Tw (should provide relevant and reliable information. The Boards have) TjT* 0.0052 Tc 2.0548 Tw (developed this Statement so as to give equal emphasis to each of) TjT* 0.007 Tc 0.0022 Tw (these financial statements.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A54) Tj28.8 0 TD 0.0061 Tc 2.307 Tw (Each of the elements of financial statements has been defined in) Tj0 -10.08 TD 0.0053 Tc 0.1718 Tw (terms of future economic benefits or sacrifices thereof. Revenues and) TjT* 0.0059 Tc 2.0192 Tw (expenses are defined in terms of changes in assets and liabilities.) TjT* 0.0056 Tc 1.7635 Tw (The existence of assets and liabilities is able to be confirmed at a) TjT* 0.0056 Tc 1.2219 Tw (point in time. This is not so for revenues and expenses. Defining) TjT* 0.0059 Tc 1.4913 Tw (revenues and expenses in terms of changes in assets and liabilities) TjT* 0.0045 Tc 0.4579 Tw (provides a framework for reporting those elements according to their) TjT* 0.0058 Tc 2.6167 Tw (economic substance, and limits the scope for bias, intentional or) TjT* 0.0052 Tc 1.5093 Tw (otherwise, in the reporting of revenues and expenses. Each of the) TjT* 0.0046 Tc 0.2446 Tw (overseas frameworks referred to above defines revenues and expenses) TjT* 0.0058 Tc 0.0033 Tw ($or their equivalent$ in terms of changes in assets and liabilities.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A55) Tj28.8 0 TD 0.0056 Tc 1.0355 Tw (Defining revenues and expenses in this manner does not imply that) Tj0 -10.08 TD 0.006 Tc 5.1632 Tw (changes in assets and liabilities would necessarily affect the) TjT* 0.0049 Tc 1.6362 Tw (determination of reported results. Depending on the nature of the) TjT* 0.0053 Tc 1.1079 Tw (measurement model adopted, changes in the value of assets may be) TjT* 0.0052 Tc 2.164 Tw (recognised as direct adjustments to the amount of equity without,) TjT* 0.005 Tc 1.7641 Tw (therefore, affecting the reported result. The topic of measurement) TjT* 0.0054 Tc 1.0597 Tw (will be the subject of a separate Statement of Accounting Concepts.) TjT* 0.005 Tc 0.6041 Tw (In addition, there are various mechanisms that could be employed to) TjT* 0.0054 Tc 1.8758 Tw (display revenues and expenses in the operating statement so as to) TjT* 0.0064 Tc 5.2527 Tw (maximise the usefulness of that statement to assessments of) TjT* 0.005 Tc 5.3527 Tw (performance $examples of these mechanisms are provided in) TjT* 0.0027 Tc 0.0064 Tw (paragraph A48$.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A56) Tj28.8 0 TD 0.0055 Tc 3.497 Tw (The usefulness of a financial report in reflecting the economic) Tj0 -10.08 TD 0.0055 Tc 0.9854 Tw (substance of an entity's operations depends not only on the basis on) TjT* 0.0055 Tc 2.8836 Tw (which the elements are defined and recognised, but also on the) TjT* 0.0058 Tc 2.7234 Tw (measurement basis applied to those elements and the manner in) TjT* 0.0059 Tc 0.4833 Tw (which they are presented in the financial report. This Statement has) TjETendstreamendobj153 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj154 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (78) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0049 Tc 0.0899 Tw (been structured in as neutral a style as possible to allow for a range of) Tj0 -10.08 TD 0.0049 Tc 2.6142 Tw (existing and potential future approaches to the measurement and) TjT* 0.0053 Tc 3.8705 Tw (display of financial information. However, its scope does not) TjT* 0.0058 Tc 0.3633 Tw (encompass those aspects and the Statement cannot, therefore, resolve) TjT* 0.0054 Tc 0.571 Tw (all of the issues that impinge on reporting the commercial reality, or) TjT* 0.0058 Tc 0.0033 Tw (economic substance, of the entity's operations.) Tj-28.8 -10.08 TD 0.001 Tc 0 Tw (A57) Tj28.8 0 TD 0.0051 Tc 3.6041 Tw (Some commentators have argued that the superseded Statement) Tj0 -10.08 TD 0.0055 Tc 1.4703 Tw (implied the measurement of assets and liabilities at current market) TjT* 0.0052 Tc 0.5319 Tw (values with changes in those values included in reported results, and) TjT* 0.0056 Tc 0.9635 Tw (therefore that the Statement emphasised information about financial) TjT* 0.005 Tc 3.0441 Tw (position to the detriment of information about performance. In) TjT* 0.0059 Tc 0.4592 Tw (addition, comments were made that the definition of liabilities in the) TjT* 0.0046 Tc 2.1988 Tw (superseded Statement would have required liabilities for unearned) TjT* 0.0047 Tc 0.2044 Tw (revenues to be measured in a manner that causes profit to be reported) TjT* 0.0052 Tc 0.1567 Tw (prior to performance by the entity. However, both this Statement and) TjT* 0.0051 Tc 1.2383 Tw (the superseded Statement are compatible with various measurement) TjT* 0.0047 Tc 2.9084 Tw (bases $for example, historical cost or any form of current value) TjT* 0.0054 Tc 0.1783 Tw (accounting$ that may be adopted. Similarly, if assets or liabilities are) TjT* 0.0053 Tc 2.3738 Tw (revalued, the Statement does not identify whether the revaluation) TjT* 0.005 Tc 2.5541 Tw (increments and decrements would be recognised as revenues and) TjT* 0.0054 Tc 1.1317 Tw (expenses, or as direct adjustments to equity $such as adjustments to) TjT* 0.0053 Tc 0.0038 Tw (asset revaluation reserves$.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A58) Tj28.8 0 TD 0.0046 Tc 1.2845 Tw (As noted in paragraph A41, some commentators on the superseded) Tj0 -10.08 TD 0.0055 Tc 5.455 Tw (Statement had interpreted the Statement as having generally) TjT* 0.0041 Tc 5.915 Tw (precluded deferral of costs and provisioning for any future) TjT* 0.0057 Tc 0.3767 Tw (expenditures. However, where these items satisfy the definitions and) TjT* 0.0053 Tc 0.8738 Tw (recognition criteria for assets and liabilities, their recognition would) TjT* 0.0057 Tc 0.27 Tw (be consistent with this Statement. Many accepted reporting practices) TjT* 0.0053 Tc 1.4918 Tw (directed at reporting the effects of transactions and other events in) TjT* 0.0052 Tc 1.2999 Tw (the reporting periods to which they relate would be consistent with) TjT* 0.0061 Tc 4.923 Tw (this Statement. For example, commentary in this Statement) TjT* 0.0052 Tc 2.3696 Tw (identifies unearned revenue and warranty provisions as liabilities,) TjT* 0.0051 Tc 4.1107 Tw (with the result that related revenues and expenses qualify for) TjT* 0.0052 Tc 0.5319 Tw (recognition in a manner that reflects the periodic performance of the) TjT* 0.0069 Tc 0 Tw (entity.) Tj-28.8 -20.16 TD 0.001 Tc (A59) Tj28.8 0 TD 0.0056 Tc 0.6996 Tw (Concomitant with the defining of revenues and expenses in terms of) Tj0 -10.08 TD 0.0061 Tc 2.0103 Tw (changes in assets and liabilities is the fact that application of the) TjT* 0.0056 Tc 3.4702 Tw (criteria for the recognition of assets and liabilities "drives" the) TjT* 0.0049 Tc 4.0309 Tw (application of the criteria for the recognition of revenues and) TjT* 0.0051 Tc 0.4185 Tw (expenses. For example, if an entity incurs costs during the reporting) TjT* 0.0052 Tc 0.0039 Tw (period and is unable, at the date of the expenditure, to establish that it) TjT* 0.0055 Tc 2.137 Tw (is probable that future economic benefits will eventuate, the costs) TjT* 0.0052 Tc 0.5393 Tw (would not qualify for recognition as an asset as at that date. Rather,) TjT* 0.005 Tc 0.6281 Tw (the costs would qualify for recognition as expenses, because they are) TjT* 0.005 Tc 0.1841 Tw (probable consumptions or losses of future economic benefits resulting) TjETendstreamendobj155 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj156 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (79) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0055 Tc 2.6837 Tw (from a reduction in assets. Some may argue that whether it is) Tj0 -10.08 TD 0.005 Tc 1.0121 Tw (probable that a consumption or loss of future economic benefits has) TjT* 0.0046 Tc 3.2274 Tw (occurred should be determined independently of whether related) TjT* 0.0049 Tc 2.1643 Tw (assets qualify for recognition. However, the view adopted by the) TjT* 0.0051 Tc 2.564 Tw (Boards is that the recognition criteria for revenues and expenses) TjT* 0.0051 Tc 0.644 Tw (cannot be applied independently of the recognition criteria for assets) TjT* 0.0059 Tc 4.0833 Tw (and liabilities if the operating statement and the statement of) TjT* 0.0051 Tc 0.004 Tw (financial position are to appropriately link with each other.) Tj0 -30.24 TD /F2 10.08 Tf0.0038 Tc 0.0053 Tw (Recognition Criterion of Probable Future Benefits or Probable) TjET170.88 546.72 257.04 0.48 re fBT170.88 538.32 TD0.0045 Tc 0.0046 Tw (Future Sacrifice of Benefits) TjET170.88 536.64 112.08 0.48 re fBT142.08 518.16 TD/F0 10.08 Tf0.001 Tc 0 Tw (A60) Tj28.8 0 TD 0.0051 Tc 2.494 Tw (A number of submissions on the superseded Statement expressed) Tj0 -10.08 TD 0.0049 Tc 0.2976 Tw (concern about the general recognition criterion of probability. Views) TjT* 0.0053 Tc 0.0039 Tw (which were commonly expressed were that:) Tj0 -20.16 TD 0.0035 Tc 0 Tw ($a$) Tj28.8 0 TD 0.005 Tc 0.587 Tw (assets and revenues should be recognised more conservatively) Tj0 -10.08 TD 0.0055 Tc 1.9536 Tw (than liabilities and expenses $for example, assets should be) TjT* 0.005 Tc 0.0041 Tw (recognised when future benefits are virtually certain$;) Tj-28.8 -20.16 TD 0.0029 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0048 Tc 3.8443 Tw (determining whether an item is probable requires undue) Tj0 -10.08 TD 0.0054 Tc 0.0038 Tw (subjectivity; and) Tj-28.8 -20.16 TD 0.0042 Tc 0 Tw ($c$) Tj28.8 0 TD 0.0053 Tc 2.1981 Tw (classification of compound securities as equity or liabilities) Tj0 -10.08 TD 0.0048 Tc 1.4443 Tw (according to whether it is probable that a future sacrifice of) TjT* 0.0051 Tc 0.3774 Tw (economic benefits to the security holders will be required may) TjT* 0.005 Tc 0.6941 Tw (result in reporting of unreliable information and the potential) TjT* 0.0053 Tc 1.9924 Tw (for particular securities to be reclassified between liabilities) TjT* 0.0049 Tc 0.0042 Tw (and equity a number of times.) Tj-57.6 -20.16 TD 0.001 Tc 0 Tw (A61) Tj28.8 0 TD 0.0049 Tc 1.2042 Tw (The Boards are of the view that the general recognition criteria for) Tj0 -10.08 TD 0.0054 Tc 2.251 Tw (each element should be symmetrical. They chose not to adopt a) TjT* 0.0054 Tc 1.2517 Tw (conservative bias in the criteria for recognition of the elements, for) TjT* 0.0055 Tc 1.497 Tw (the reasons outlined in the foregoing comparison of this Statement) TjT* 0.005 Tc 0.0695 Tw (with overseas frameworks. The adoption of a conservative bias in the) TjT* 0.0055 Tc 0.6516 Tw (recognition of the elements should not be confused with the exercise) TjT* 0.0053 Tc 3.7905 Tw (of prudence when dealing with uncertainties in the process of) TjT* 0.0049 Tc 1.5776 Tw (recognition and measurement. The Boards support the exercise of) TjT* 0.0052 Tc 0.6519 Tw (prudence in the form of ensuring that sufficient evidence is obtained) TjT* 0.0057 Tc 2.4435 Tw (to establish whether an item is probable and to ensure that it is) TjT* 0.0048 Tc 0.0043 Tw (measured reliably.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A62) Tj28.8 0 TD 0.0063 Tc 3.1228 Tw (The subjectivity of assessments of whether an item satisfies the) Tj0 -10.08 TD 0.0056 Tc 0.1999 Tw (threshold for recognition will generally be inherent in the item. That) TjT* -0.008 Tc 1.5971 Tw (is, were another threshold to be adopted \226 such as a criterion that) TjT* -0.0078 Tc 2.3636 Tw (benefits be "highly probable" or "virtually certain" \226 there would) TjETendstreamendobj157 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj158 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (80) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0052 Tc 3.3296 Tw (remain the practical difficulty of establishing whether particular) Tj0 -10.08 TD 0.006 Tc 1.2298 Tw (items meet that recognition criterion. The Statement indicates that) TjT* 0.0055 Tc 2.7503 Tw (the term "probable" means that the chance that future economic) TjT* 0.0055 Tc 0.4117 Tw (benefits will eventuate, or that a future sacrifice of economic benefits) TjT* 0.0054 Tc 0.2807 Tw (will be required, is more likely rather than less likely. Some of those) TjT* 0.0047 Tc 3.9472 Tw (who provided comment on the superseded Statement expressed) TjT* 0.0045 Tc 3.1512 Tw (concern that the degree of precision required by the probability) TjT* 0.0052 Tc 1.6839 Tw (criterion for recognition of an element was impractical. However,) TjT* 0.0053 Tc 0.8765 Tw (this recognition criterion is not intended to connote that a degree of) TjT* 0.0049 Tc 1.3909 Tw (mathematical precision would be required for its application. This) TjT* 0.0055 Tc 1.3369 Tw (Statement includes commentary that the term "probable" is used in) TjT* 0.0059 Tc 0.4233 Tw (the Statement with its usual meaning and refers to that which can be) TjT* 0.0049 Tc 0.0043 Tw (expected on the basis of available evidence or logic.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A63) Tj28.8 0 TD 0.0055 Tc 2.5956 Tw (For the majority of items, normally it can be readily established) Tj0 -10.08 TD 0.005 Tc 1.9241 Tw (whether it is probable that future benefits will eventuate or future) TjT* 0.0047 Tc 0.7724 Tw (sacrifices will be required; for example, in respect of property, plant) TjT* 0.0053 Tc 0.1538 Tw (and equipment, investments, prepayments and debtors, and in respect) TjT* 0.005 Tc 0.7459 Tw (of loans, employee entitlements and bank overdraft. In a number of) TjT* 0.0056 Tc 0.7236 Tw (cases, the effects of uncertainty would affect the determination of an) TjT* 0.005 Tc 5.1641 Tw (appropriate measure for an element rather than whether the) TjT* 0.0051 Tc 0.8574 Tw (probability recognition criterion is satisfied. For example, while for) TjT* 0.0049 Tc 0.2878 Tw (an entity there may be little doubt that property, plant and equipment) TjT* 0.0054 Tc 2.6437 Tw (will give rise to future benefits, it may be problematic to assess) TjT* 0.0051 Tc 0.58 Tw (whether the carrying amount of those items will be recoverable from) TjT* 0.0058 Tc 0.0033 Tw (future net cash inflows.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A64) Tj28.8 0 TD 0.0054 Tc 0.8304 Tw (Although the definitions and recognition criteria for the elements of) Tj0 -10.08 TD 0.0055 Tc 0.4537 Tw (financial statements have been specified separately from concepts for) TjT* 0.0055 Tc 2.4516 Tw (measurement $which will be the subject of a future Statement of) TjT* 0.0056 Tc 8.0835 Tw (Accounting Concepts$, in practice the distinction between) TjT* 0.0048 Tc 1.8443 Tw (recognition and measurement will often be blurred. For example,) TjT* 0.0044 Tc 2.9567 Tw (where it is probable but not beyond doubt that future economic) TjT* 0.0059 Tc 0.5072 Tw (benefits embodied in assets will eventuate, in practice the assets may) TjT* 0.0051 Tc 0.8549 Tw (be recognised at amounts less than their face value; for example, by) TjT* 0.0044 Tc 2.7247 Tw ("providing" for uncollectibility of a proportion of debtors. Such) TjT* 0.0049 Tc 3.4242 Tw (practices are a practical response to uncertainties regarding the) TjT* 0.0059 Tc 0.2699 Tw (eventuation of future benefits, and are consistent with this Statement,) TjT* 0.0058 Tc 0.0033 Tw (which is neutral in respect of measurement.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A65) Tj28.8 0 TD 0.0051 Tc 4.0574 Tw (The Boards have adopted the view that while the recognition) Tj0 -10.08 TD 0.0049 Tc 0.8682 Tw (criterion of probability is an appropriate concept for the elements in) TjT* 0.0048 Tc 0.0479 Tw (general, practical application of that concept may need to be varied in) TjT* 0.0049 Tc 1.0176 Tw (some Accounting Standards, so as to foster reliable and comparable) TjT* 0.0049 Tc 0.4122 Tw (reporting for items which are particularly subject to uncertainty. For) TjT* 0.0047 Tc 5.0787 Tw (example, Exposure Draft ED 59 "Financial Instruments" had) TjT* 0.0046 Tc 3.776 Tw (proposed that the component parts of liability/equity compound) TjETendstreamendobj159 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj160 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (81) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0057 Tc 0.1901 Tw (financial instruments $such as debt securities that are convertible into) Tj0 -10.08 TD 0.0057 Tc 1.7634 Tw (ordinary shares$ that are initially classified as liabilities by issuers) TjT* 0.0055 Tc 3.0036 Tw (would continue to be classified as liabilities whether or not the) TjT* 0.0052 Tc 0.7239 Tw (general probability criterion for recognition as a liability is satisfied,) TjT* 0.0047 Tc 2.0044 Tw (except when the next opportunity for conversion or redemption is) TjT* 0.0055 Tc 0.0036 Tw (within twelve months of the reporting date.) TjT* /F2 10.08 Tf0.0037 Tc 0.0054 Tw (Exercise of Judgement) TjET170.88 587.04 91.92 0.48 re fBT142.08 568.56 TD/F0 10.08 Tf0.001 Tc 0 Tw (A66) Tj28.8 0 TD 0.0056 Tc 0.5573 Tw (In various instances, it will not be clear cut how the concepts set out) Tj0 -10.08 TD 0.005 Tc 0.375 Tw (in this Statement would be applied. Adoption of control $rather than) TjT* 0.0056 Tc 0.3235 Tw (legal ownership$ as an essential characteristic of assets, and adoption) TjT* 0.005 Tc 4.0041 Tw (of present obligation $rather than only legal obligation$ as an) TjT* 0.0057 Tc 1.4914 Tw (essential characteristic of liabilities gives rise to a need to exercise) TjT* 0.0055 Tc 0.4116 Tw (judgement in areas of uncertainty when applying the concepts in this) TjT* 0.0058 Tc 0.3767 Tw (Statement. For example, in identifying liabilities, difficulties may be) TjT* 0.005 Tc 5.6041 Tw (encountered in determining whether equitable or constructive) TjT* 0.0052 Tc 0.804 Tw (obligations exist. The Boards are of the view that adoption of these) TjT* 0.0052 Tc 3.764 Tw (broad economic notions in the definitions provides a basis for) TjT* 0.0047 Tc 3.433 Tw (reporting more useful and comprehensive information about the) TjT* 0.0051 Tc 0.004 Tw (entity, and should be more useful in reflecting substance over form.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A67) Tj28.8 0 TD 0.0049 Tc 0.0042 Tw (Application of the definitions and recognition criteria would also give) Tj0 -10.08 TD 0.0053 Tc 1.0074 Tw (rise to the need to resolve measurement issues in the preparation of) TjT* 0.005 Tc 0.5496 Tw (financial reports. This would be particularly the case where types of) TjT* 0.0056 Tc 1.4835 Tw (assets and liabilities are recognised for the first time as a result of) TjT* 0.0055 Tc 0.7454 Tw (applying those concepts. The need to make these judgements in the) TjT* 0.0054 Tc 4.4266 Tw (absence of specified measurement concepts when applying the) TjT* 0.0055 Tc 1.4169 Tw (definitions and recognition criteria bears similarities to the need to) TjT* 0.0053 Tc 5.6267 Tw (resolve measurement issues in response to evolving industry) TjT* 0.0056 Tc 2.6778 Tw (practices. Nonetheless, numerous submissions on the superseded) TjT* 0.0055 Tc 0.537 Tw (Statement indicated a concern that measurement concepts need to be) TjT* 0.0048 Tc 1.2764 Tw (developed to support the application of the Statement. The Boards) TjT* 0.0049 Tc 0.5322 Tw (have given priority to the development of a Statement of Accounting) TjT* 0.0057 Tc 0.0035 Tw (Concepts dealing with measurement.) Tj0 -30.24 TD /F2 10.08 Tf0.0037 Tc 0.0054 Tw (Agreements Equally Proportionately Unperformed) TjET170.88 284.64 205.92 0.48 re fBT142.08 266.16 TD/F0 10.08 Tf0.001 Tc 0 Tw (A68) Tj28.8 0 TD 0.0055 Tc 1.1382 Tw (The Boards are of the view that recognition of assets and liabilities) Tj0 -10.08 TD 0.0049 Tc 3.8099 Tw (which arise from agreements which are equally proportionately) TjT* 0.0044 Tc 0.3538 Tw (unperformed is likely to be useful to users for making and evaluating) TjT* 0.0051 Tc 2.6441 Tw (decisions about the allocation of scarce resources. For example,) TjT* 0.0052 Tc 4.884 Tw (information about those agreements is likely to be useful to) TjT* 0.0059 Tc 0.5072 Tw (assessments of matters such as the resources controlled by the entity,) TjT* 0.0061 Tc 1.0285 Tw (the financial structure of the entity, and in some cases the financial) TjT* 0.0055 Tc 0.2836 Tw (risks to which the entity is exposed. The usefulness of recognition of) TjT* 0.0055 Tc 3.7636 Tw (these assets and liabilities has been argued by the Accounting) TjETendstreamendobj161 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj162 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (82) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0049 Tc 3.6283 Tw (Standards Board in the United Kingdom $in Chapter 4 of the) Tj0 -10.08 TD 0.005 Tc 1.3961 Tw (Discussion Draft of its Statement of Principles [July 1992]$ and by) TjT* 0.0058 Tc 1.2033 Tw (the Association for Investment Management and Research $AIMR$,) TjT* 0.0046 Tc 0.2925 Tw (the peak representative body of users of corporate financial reports in) TjT* 0.0063 Tc 0.7228 Tw (the United States) Tj70.56 3.12 TD /F0 7.92 Tf0.12 Tc 0 Tw (8) Tj4.08 -3.12 TD /F0 10.08 Tf0.0052 Tc 0.8267 Tw ( $in a position paper entitled "Financial Reporting) Tj-74.64 -10.08 TD 0.0044 Tc 1.7807 Tw (in the 1990s and Beyond" [December 1993]$. A Research Report) Tj0 -10.08 TD 0.005 Tc 3.6841 Tw (published by the FASB) Tj104.64 3.12 TD /F0 7.92 Tf0.12 Tc 0 Tw (9) Tj4.08 -3.12 TD /F0 10.08 Tf0.0058 Tc 3.8434 Tw ( has commented that some rights and) Tj-108.72 -10.08 TD 0.0046 Tc 8.0685 Tw (obligations arising from agreements equally proportionately) Tj0 -10.08 TD 0.0046 Tc 1.2312 Tw (unperformed would in concept qualify for recognition as assets and) TjT* 0.0049 Tc 1.2042 Tw (liabilities. SFAC 6 provides implicit support for the recognition of) TjT* 0.0061 Tc 1.9012 Tw (assets and liabilities in respect of those agreements. It notes that) TjT* 0.0052 Tc 0.0759 Tw (estimated losses on purchase commitments are "the recorded part of a) TjT* 0.0053 Tc 4.7138 Tw (series of transactions and events that are mostly unrecorded") TjT* 0.0046 Tc 0.8336 Tw ($paragraph 251$, that they are "in concept a reduction of $an$ asset") TjT* 0.0047 Tc 0.8644 Tw ($paragraph 252$ and that "If both the right to receive assets and the) TjT* 0.0046 Tc 4.5405 Tw (obligation to pay were recorded at the time of the purchase) TjT* 0.0057 Tc 1.7075 Tw (commitment, the nature of the loss and the valuation account that) TjT* 0.0047 Tc 2.2124 Tw (records it when the price falls would be clearly seen" $paragraph) TjT* 0.0054 Tc 1.0291 Tw (252$. In addition, the view that recognition of assets and liabilities) TjT* 0.0047 Tc 7.5244 Tw (arising from agreements which are equally proportionately) TjT* 0.0045 Tc 3.1901 Tw (unperformed is likely to be useful to users is supported by the) TjT* 0.0051 Tc 3.5011 Tw (Accounting Standards in Australia and in overseas jurisdictions) TjT* 0.0054 Tc 3.497 Tw (which require recognition of assets and liabilities in respect of) TjT* 0.0054 Tc 0.0038 Tw (finance leases and foreign currency contracts.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A69) Tj28.8 0 TD 0.0056 Tc 1.9236 Tw (However, recognition of all assets and liabilities which arise from) Tj0 -10.08 TD 0.0046 Tc 4.1245 Tw (agreements equally proportionately unperformed and satisfy the) TjT* 0.0047 Tc 2.6744 Tw (criteria for recognition would represent a fundamental change to) TjT* 0.0052 Tc 0.1539 Tw (existing reporting practices in Australia and in overseas jurisdictions.) TjT* 0.0048 Tc 3.2957 Tw (In addition, many agreements which are equally proportionately) TjT* 0.0051 Tc 1.4973 Tw (unperformed may give rise to significant uncertainty as to whether) TjT* 0.0053 Tc 6.9981 Tw (the definitions and recognition criteria would be satisfied.) TjT* 0.0058 Tc 1.8633 Tw (Recognition of assets and liabilities arising from these agreements) TjT* 0.0057 Tc 2.3501 Tw (gives rise to measurement issues. Substantial difficulties may be) TjT* 0.0045 Tc 1.7447 Tw (encountered in determining a reliable and appropriate measure for) TjT* 0.0061 Tc 2.2351 Tw (assets and liabilities which may arise from these agreements. In) TjT* 0.0053 Tc 4.5938 Tw (addition, decisions about the relative measures for assets and) TjT* 0.0052 Tc 5.7639 Tw (liabilities which may be recognised in respect of particular) TjT* 0.0052 Tc 0.2973 Tw (agreements could affect the reported results of the entity's operations.) TjT* 0.006 Tc 2.8351 Tw (Recognition of these assets and liabilities gives rise to issues of) TjT* 0.0058 Tc 1.0833 Tw (display $such as whether and, if so, when those items should be set) Tj-28.8 -13.68 TD 0 Tc 0.0091 Tw ( ) Tj79.2 0 TD ( ) TjET142.08 234.48 144 0.48 re fBT142.08 227.04 TD/F0 7.92 Tf0.12 Tc 0 Tw (8) Tj14.4 -3.12 TD -0.0876 Tc 0.4805 Tw (The AIMR comprises the Institute of Chartered Financial Analysts and the Financial Analysts) Tj0 -7.92 TD -0.0848 Tc 0 Tw (Federation.) Tj-14.4 -12.72 TD 0.12 Tc (9) Tj14.4 -3.12 TD -0.0793 Tc 0.8388 Tw ("Recognition in Financial Statements: Underlying Concepts and Practical Conventions" \(July) Tj0 -7.92 TD 0.0559 Tc 0 Tw (1982$.) TjETendstreamendobj163 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj164 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (83) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0059 Tc 0.1124 Tw (off against each other in the presentation of the statement of financial) Tj0 -10.08 TD 0.0054 Tc 0.6704 Tw (position\) which, although beyond the scope of this Statement, would) TjT* 0.0049 Tc 0.115 Tw (need to be addressed in practice. The Boards have yet to consider the) TjT* 0.0049 Tc 1.3909 Tw (stage$s$ at which revenues and expenses should be recognised over) TjT* 0.0058 Tc 0.0687 Tw (the duration of these agreements, and the manner in which assets and) TjT* 0.0056 Tc 1.3368 Tw (liabilities arising from these agreements should be presented in the) TjT* 0.0061 Tc 0.003 Tw (statement of financial position.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A70) Tj28.8 0 TD 0.0043 Tc 3.8448 Tw (The Boards support an evolution in reporting practices toward) Tj0 -10.08 TD 0.0055 Tc 3.9036 Tw (recognition of these assets and liabilities, supported by similar) TjT* 0.0056 Tc 5.1035 Tw (developments in overseas jurisdictions. This subject will be) TjT* 0.0048 Tc 5.4176 Tw (addressed by particular projects of the Boards, such as the) TjT* 0.0051 Tc 1.1012 Tw (development of Accounting Standards for financial instruments and) TjT* 0.0048 Tc 0.3343 Tw (the future review of Accounting Standards for construction contracts,) TjT* 0.0053 Tc 0.0038 Tw (leases and foreign currency translation.) Tj0 -30.24 TD /F2 10.08 Tf0.0041 Tc 0.005 Tw (Provisions for Overhauls, Repairs and Renewals) TjET170.88 476.16 197.28 0.48 re fBT142.08 457.68 TD/F0 10.08 Tf0.001 Tc 0 Tw (A71) Tj28.8 0 TD 0.0053 Tc 1.8172 Tw (Some commentators on the superseded Statement argued that it is) Tj0 -10.08 TD 0.0047 Tc 2.2604 Tw (appropriate for an entity to recognise as a liability provisions for) TjT* 0.0046 Tc 2.0445 Tw (overhauls, repairs and renewals of property, plant and equipment,) TjT* 0.0051 Tc 3.2307 Tw (with concomitant recognition of an expense. They argued that) TjT* 0.0051 Tc 2.476 Tw (application of this policy ensures a proper matching of the costs) TjT* 0.0048 Tc 1.551 Tw (arising from operations with the revenues for the reporting period,) TjT* 0.0054 Tc 1.3537 Tw (and reflects in reported liabilities the necessary expenditures which) TjT* 0.0047 Tc 2.4444 Tw (will arise in future periods as a result of operations prior to the) TjT* 0.0052 Tc 0.3879 Tw (reporting date. Many of those commentators expressed the view that) TjT* 0.006 Tc 1.9498 Tw (the concept of liabilities in the superseded Statement is consistent) TjT* 0.0055 Tc 0.0036 Tw (with this approach.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A72) Tj28.8 0 TD 0.0046 Tc 3.3945 Tw (However, provisions for overhauls, repairs and renewals do not) Tj0 -10.08 TD 0.0047 Tc 0.179 Tw (involve a present obligation to an external party, and therefore do not) TjT* 0.0064 Tc 5.0161 Tw (satisfy the definition of liabilities in this Statement and the) TjT* 0.0049 Tc 2.8842 Tw (superseded Statement. An obligation would normally only arise) TjT* 0.005 Tc 0.0282 Tw (when the works were performed. This applies irrespective of whether) TjT* 0.0049 Tc 1.3002 Tw (future expenditures are necessary as a result of past transactions or) TjT* 0.0054 Tc 1.5637 Tw (other past events in order to meet the entity's operating objectives.) TjT* 0.0049 Tc 1.2042 Tw (For example, a profit-seeking entity's need to replace raw materials) TjT* 0.0049 Tc 1.0515 Tw (used in productive operations does not give rise to a liability unless) TjT* 0.0052 Tc 1.2239 Tw (there is a present obligation to an external party. Similarly, a not-) TjT* 0.0049 Tc 1.0176 Tw (for-profit entity's need to replace items of equipment or consumable) TjT* 0.0046 Tc 1.0045 Tw (stores which have been used up prior to the reporting date does not) TjT* 0.0056 Tc 0.1999 Tw (constitute a liability, even where the entity is obliged by legislation to) TjT* 0.0063 Tc 0.0028 Tw (maintain the provision of essential services with those assets.) TjETendstreamendobj165 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj166 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (84) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.56 TD 0.001 Tc 0 Tw (A73) Tj28.8 0 TD 0.0053 Tc 0.4839 Tw (Some commentators on the superseded Statement expressed the view) Tj0 -10.08 TD 0.0056 Tc 0.6515 Tw (that the essential characteristic of a present obligation to an external) TjT* 0.005 Tc 0.7896 Tw (party results in an unduly narrow concept of liabilities. However, if) TjT* 0.0054 Tc 4.1557 Tw (the concept of present obligation were not to be an essential) TjT* 0.0051 Tc 0.004 Tw (characteristic of liabilities, a very wide and difficult to define range of) TjT* 0.0056 Tc 1.8935 Tw ("necessary" future sacrifices of economic benefits could satisfy the) TjT* 0.0052 Tc 1.5879 Tw (definition of liabilities. For example, in addition to provisions for) TjT* 0.0051 Tc 2.0269 Tw (overhauls, repairs and renewals, anticipated losses on unprofitable) TjT* 0.0046 Tc 0.6946 Tw (segments or on future restructurings, provisions for uninsured future) TjT* 0.0052 Tc 0.334 Tw (losses, and commitments for intended future acquisitions of property,) TjT* 0.0055 Tc 4.4736 Tw (plant and equipment could satisfy the definition of liabilities.) TjT* 0.0053 Tc 3.2038 Tw (Reporting these items as liabilities would obscure the nature of) TjT* 0.0047 Tc 1.2044 Tw (information reported about financial position as at a particular date) TjT* 0.0038 Tc 1.7454 Tw (and about performance for particular reporting periods, and would) TjT* 0.0051 Tc 0.004 Tw (impair the reliability and comparability of financial reports.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A74) Tj28.8 0 TD 0.005 Tc 1.2041 Tw (The view of the Boards is supported by specific commentary in the) Tj0 -10.08 TD 0.0043 Tc 1.8048 Tw (FASB and United Kingdom frameworks. For example, paragraph) TjT* 0.0051 Tc 0.0041 Tw (200 of SFAC 6 states that:) Tj14.4 -20.16 TD 0.0047 Tc 0.2444 Tw ("... Not all probable future sacri) Tj129.6 0 TD 0.0061 Tc 0.4831 Tw (fices of economic benefits $assets$) Tj-129.6 -10.08 TD 0.0056 Tc 2.7744 Tw (are liabilities of an entity. For example, an entity's need to) Tj0 -10.08 TD 0.0046 Tc 0.5379 Tw (replace merchandise sold or raw materials or equipment used up,) TjT* 0.0055 Tc 0.6145 Tw (no matter how pressing, does not by itself constitute a liability of) TjT* 0.0056 Tc 3.3636 Tw (the entity because no present obligation to another entity is) TjT* 0.0061 Tc 0 Tw (present.") Tj-43.2 -20.16 TD 0.001 Tc (A75) Tj28.8 0 TD 0.0039 Tc 1.0372 Tw (Paragraph 30 of Chapter 3 of the draft United Kingdom framework) Tj0 -10.08 TD 0.007 Tc 0.0021 Tw (states that:) Tj14.4 -20.16 TD 0.005 Tc 0.266 Tw ("... costs to be incurred in the future $for example, replacement or) Tj0 -10.08 TD 0.0059 Tc 0.0566 Tw (maintenance of plant$ do not represent liabilities, unless the entity) TjT* 0.0053 Tc 0.942 Tw (has an obligation to another party to incur the costs in question,) TjT* 0.0049 Tc 3.3883 Tw (or retains no discretion to avoid the expenditure. Such an) TjT* 0.0042 Tc 0.0703 Tw (obligation might arise under a contract for goods to be supplied or) TjT* 0.0049 Tc 0.0042 Tw (services performed.") Tj-43.2 -20.16 TD 0.001 Tc 0 Tw (A76) Tj28.8 0 TD 0.0051 Tc 2.0767 Tw (As is noted in paragraph 60 of this Statement, application of the) Tj0 -10.08 TD 0.0048 Tc 1.7563 Tw (concepts would result in recognition of the cost of using property,) TjT* 0.0049 Tc 0.3162 Tw (plant and equipment as depreciation expenses in respect of the future) TjT* 0.0051 Tc 3.1583 Tw (economic benefits embodied in existing components of property,) TjT* 0.0048 Tc 0.7483 Tw (plant and equipment as they are consumed. Each component would) TjT* 0.0049 Tc 0.9242 Tw (be depreciated over its useful life, rather than over the useful life of) TjT* 0.0052 Tc 1.553 Tw (the structure to which it belongs. For example, an aircraft engine) TjT* 0.0045 Tc 1.4207 Tw (would be depreciated over its expected useful life, rather than over) TjT* 0.0053 Tc 2.2038 Tw (the life of the aircraft to which it belongs. The expenditures on) TjT* 0.0051 Tc 1.0974 Tw (overhauls, repairs and renewals of those components would then be) TjETendstreamendobj167 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj168 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (85) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0052 Tc 3.124 Tw (recognised as additions to those structures in place of the fully) Tj0 -10.08 TD 0.0051 Tc 2.884 Tw (depreciated components. In practice, recognition of expenses in) TjT* 0.0048 Tc 2.8844 Tw (respect of periodic overhauls, repairs and renewals when related) TjT* 0.0051 Tc 2.704 Tw (expenditures are made would be compatible with this Statement,) TjT* 0.0053 Tc 0.1347 Tw (provided the effect is materially similar to the effect of applying these) TjT* 0.0059 Tc 0 Tw (concepts.) Tj0 -20.16 TD /F2 10.08 Tf0.0042 Tc (Contributions) TjET170.88 576.96 55.92 0.48 re fBT142.08 558.48 TD/F0 10.08 Tf0.001 Tc (A77) Tj28.8 0 TD 0.0054 Tc 3.2737 Tw (The treatment of contributions to not-for-profit entities, such as) Tj0 -10.08 TD 0.0053 Tc 1.1009 Tw (donations, grants, appropriations, taxes, rates and membership fees,) TjT* 0.0048 Tc 3.5825 Tw (has been a vexed issue. The view adopted in the superseded) TjT* 0.0042 Tc 0.5218 Tw (Statement and reflected in paragraphs 90 to 91 and 98 to 108 of this) TjT* 0.0056 Tc 7.9578 Tw (Statement, concerning the application of the concepts to) TjT* 0.0056 Tc 2.0327 Tw (contributions, has been the subject of a range of comments. The) TjT* 0.0049 Tc 0.1413 Tw (following discussion explores the more frequently expressed concerns) TjT* 0.0056 Tc 0.0036 Tw (and sets out the Boards' response to those concerns.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A78) Tj28.8 0 TD 0.0063 Tc 2.5095 Tw (The issue essentially turns on whether these items are liabilities,) Tj0 -10.08 TD 0.0053 Tc 2.7529 Tw (revenues or equity. The view adopted in this Statement is that) TjT* 0.0057 Tc 1.3474 Tw (contributions do not meet the definition of liabilities, and that they) TjT* 0.005 Tc 2.4761 Tw (should be accounted for as revenues except in the rare instances) TjT* 0.0051 Tc 0.58 Tw (where the contributions are of the nature of contributions by owners,) TjT* 0.0051 Tc 0.004 Tw (in which case they should be accounted for as contributions of equity.) Tj0 -20.16 TD /F2 10.08 Tf0.0046 Tc 0.0045 Tw (Do contributions give rise to liabilities?) TjET170.88 395.52 162.96 0.48 re fBT142.08 377.04 TD/F0 10.08 Tf0.001 Tc 0 Tw (A79) Tj28.8 0 TD 0.0051 Tc 0.874 Tw (Some commentators on the superseded Statement argued that where) Tj0 -10.08 TD 0.0047 Tc 1.3758 Tw (there exist strong fiduciary obligations resulting from undischarged) TjT* 0.0055 Tc 4.1522 Tw (restrictions over contributions received, a liability exists which) TjT* 0.005 Tc 1.8974 Tw (corresponds in amount to the restricted resources. This argument) TjT* 0.0058 Tc 0.5234 Tw (was based on the view that the entity will need to sacrifice economic) TjT* 0.0056 Tc 1.2275 Tw (benefits to other parties in satisfying the conditions for retention of) TjT* 0.0049 Tc 5.5586 Tw (the contribution. However, a not-for-profit entity's fiduciary) TjT* 0.0048 Tc 1.2523 Tw (obligation to use assets to provide goods and services to consumers) TjT* 0.0058 Tc 0.7669 Tw (and beneficiaries does not, of itself, create a claim against the entity) TjT* 0.0048 Tc 0.288 Tw (by an external party which will require a future sacrifice of economic) TjT* 0.0058 Tc 0.8633 Tw (benefits. For transfers to an entity to create a liability, the transfers) TjT* 0.0048 Tc 0.0044 Tw (would need to be reciprocal, whereby the transferor and the transferee) TjT* 0.0045 Tc 1.3913 Tw (directly receive and sacrifice approximately equal value. A crucial) TjT* 0.0052 Tc 0.9879 Tw (feature of reciprocal transfers is that the recipient entity gives value) TjT* 0.0053 Tc 0.2438 Tw (in exchange) Tj49.2 0 TD /F1 10.08 Tf0 Tc 0.0091 Tw ( ) Tj2.88 0 TD /F2 10.08 Tf0.0053 Tc 0 Tw (directly) Tj31.2 0 TD /F0 10.08 Tf0.0057 Tc 0.4594 Tw ( to the transferring entity. It is not sufficient for) Tj-83.28 -10.08 TD 0.0051 Tc 2.116 Tw (the transferring entity to receive value $or benefit$ indirectly as a) Tj0 -10.08 TD 0.0052 Tc 3.124 Tw (result of the transfer. Were non-reciprocal transfers also to be) TjT* 0.0057 Tc 2.8834 Tw (identified as giving rise to liabilities, all receipts of assets from) TjT* 0.0055 Tc 3.8837 Tw (external parties $whether from owners, customers, beneficiaries,) TjT* 0.0054 Tc 0.9638 Tw (donors or lenders$ would need to be classified initially as liabilities.) TjETendstreamendobj169 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj170 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (86) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0054 Tc 5.1504 Tw (For example, on this basis all contributions by members to) Tj0 -10.08 TD 0.0054 Tc 1.3837 Tw (professional associations, clubs and societies would be identified as) TjT* 0.0053 Tc 6.7238 Tw (giving rise to liabilities, as would all government grants,) TjT* 0.0051 Tc 1.3107 Tw (appropriations and taxes. Similarly, where a company raises share) TjT* 0.0051 Tc 1.18 Tw (capital based on representations in a prospectus that it will develop) TjT* 0.0053 Tc 0.1515 Tw (and operate a new facility, it would need to identify the share issue as) TjT* 0.005 Tc 3.3161 Tw (giving rise to a liability for its fiduciary obligation to sacrifice) TjT* 0.0051 Tc 0.5321 Tw (economic benefits in the future. In addition, because a not-for-profit) TjT* 0.0047 Tc 3.6844 Tw (entity's fiduciary obligation to use assets to provide goods and) TjT* 0.0057 Tc 0.8675 Tw (services to consumers and beneficiaries pertains to all of the entity's) TjT* 0.0053 Tc 0.5492 Tw (assets, were the existence of a fiduciary obligation to be identified as) TjT* 0.0056 Tc 0.6276 Tw (a sufficient condition for the existence of a liability, liabilities would) TjT* 0.0057 Tc 0.9265 Tw (need to be identified in respect of all of the entity's assets and there) TjT* 0.004 Tc 0.0051 Tw (would be no equity.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A80) Tj28.8 0 TD 0.005 Tc 0.0522 Tw (If the view is adopted tha) Tj102.48 0 TD 0.0053 Tc 0.2439 Tw (t fiduciary obligations give rise to liabilities,) Tj-102.48 -10.08 TD 0.0051 Tc 2.6973 Tw (but only where the obligations relate to explicit restrictions over) Tj0 -10.08 TD 0.0051 Tc 0.874 Tw (contributions, a problem arises where contributions are restricted on) TjT* 0.0052 Tc 0.6639 Tw (the basis that they are to be expended on the acquisition of specified) TjT* 0.0052 Tc 1.2039 Tw (assets and that those assets would be used for service delivery on a) TjT* 0.0053 Tc 3.0802 Tw (continuing basis. If a liability were to be recognised for these) TjT* 0.005 Tc 3.4707 Tw (fiduciary obligations, it would be difficult to identify when the) TjT* 0.0049 Tc 0.7242 Tw (liability should be derecognised. For example, not-for-profit entities) TjT* 0.0049 Tc 1.6309 Tw (are occasionally provided with "seed money" for the acquisition of) TjT* 0.0055 Tc 1.3036 Tw (long-lived assets on the condition that the assets are to be used for) TjT* 0.005 Tc 0.4242 Tw (designated services and that they are to be replaced as they wear out.) TjT* 0.0049 Tc 4.1376 Tw (Expenditure of the money in the manner specified would not) TjT* 0.0054 Tc 1.8757 Tw (extinguish the fiduciary obligation of the recipient. If the entity's) TjT* 0.0058 Tc 0.9934 Tw (obligation to sacrifice economic benefits in satisfying the conditions) TjT* 0.0054 Tc 2.7877 Tw (attaching to the contribution were to be identified as a liability,) TjT* 0.0056 Tc 2.7155 Tw (notwithstanding that there does not presently exist a claim by a) TjT* 0.0052 Tc 5.0173 Tw (particular external party against the entity in respect of the) TjT* 0.0051 Tc 0.0041 Tw (contribution, it would appear that the "liability" would encompass:) Tj0 -20.16 TD 0.0035 Tc 0 Tw ($a$) Tj28.8 0 TD 0.0053 Tc 0.0038 Tw (the amount to be expended on the acquisition of the assets;) Tj-28.8 -20.16 TD 0.0029 Tc 0 Tw ($b$) Tj28.8 0 TD 0.0059 Tc 0.8432 Tw (the amount to be sacrificed on the maintenance of the assets;) Tj0 -10.08 TD 0.0055 Tc 0.0036 Tw (and, possibly,) Tj-28.8 -20.16 TD 0.0042 Tc 0 Tw ($c$) Tj28.8 0 TD 0.0056 Tc 0.0035 Tw (the amount to be sacrificed on replacement of the assets.) Tj-57.6 -20.16 TD 0.001 Tc 0 Tw (A81) Tj28.8 0 TD 0.0052 Tc 2.3319 Tw (Under such a policy, the entity, upon receipt of the contribution,) Tj0 -10.08 TD 0.0052 Tc 3.0639 Tw (normally would recognise liabilities in excess of the contributed) TjT* 0.0056 Tc 3.4355 Tw (assets and therefore recognise a reduction in net assets. Such) TjT* 0.0051 Tc 2.308 Tw (accounting would not only broaden the notion of liabilities to an) TjT* 0.0052 Tc 1.8973 Tw (unacceptable extent; it would also seem incongruous with the fact) TjETendstreamendobj171 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj172 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (87) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0056 Tc 2.4035 Tw (that the entity's capacity to achieve its service delivery objectives) Tj0 -10.08 TD 0.005 Tc 0.0041 Tw (would have increased as a result of the contribution.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A82) Tj28.8 0 TD 0.0061 Tc 2.619 Tw (The view adopted in this Statement is consistent with the views) Tj0 -10.08 TD 0.0056 Tc 4.5335 Tw (expressed in the only overseas Concepts Statement that deals) TjT* 0.0059 Tc 0.4566 Tw (specifically with restricted contributions, that is, the FASB's SFAC 6) TjT* 0.0048 Tc 1.0953 Tw ($refer to paragraphs 56 to 58$. The FASB's Statement of Financial) TjT* 0.0045 Tc 5.2846 Tw (Accounting Standards No. 116 "Accounting for Contributions) TjT* 0.0049 Tc 0.8142 Tw (Received and Contributions Made" $SFAS 116$ applies the concepts) TjT* 0.0039 Tc 0.0052 Tw (set out in SFAC 6 $SFAS 116, paragraph 67$.) Tj0 -20.16 TD /F2 10.08 Tf0.0039 Tc 0.0052 Tw (Recognition of contributions as revenues: is there an "earnings) TjET170.88 536.64 257.28 0.48 re fBT170.88 528.24 TD0.0049 Tc 0 Tw (process"?) TjET170.88 526.56 39.6 0.48 re fBT142.08 508.08 TD/F0 10.08 Tf0.001 Tc (A83) Tj28.8 0 TD 0.0052 Tc 1.2039 Tw (Some commentators disagreed with the recognition of contributions) Tj0 -10.08 TD 0.0055 Tc 0.9636 Tw (as revenues when control is obtained over the assets comprising the) TjT* 0.0052 Tc 0.3748 Tw (contribution. They argued that all revenues of an entity, whether the) TjT* 0.0048 Tc 1.2643 Tw (entity is profit-seeking or not-for-profit, should be recognised when) TjT* 0.0049 Tc 2.1642 Tw (they are "earned". A number of those commentators argued that) TjT* 0.0052 Tc 2.8839 Tw (meeting contributor-imposed conditions constitutes the process of) TjT* 0.0049 Tc 3.8785 Tw (earning restricted contributions. Accordingly, they argued that) TjT* 0.0052 Tc 1.654 Tw (restricted contributions should be recognised as revenues when the) TjT* 0.0053 Tc 0.4538 Tw (conditions are satisfied, and that unrestricted contributions should be) TjT* 0.0052 Tc 5.2839 Tw (recognised as revenues when control is obtained over them.) TjT* 0.0051 Tc 0.404 Tw (However, where contributions are received on the condition that they) TjT* 0.0049 Tc 1.1043 Tw (are to be expended on the acquisition of long-lived assets or on the) TjT* 0.0054 Tc 1.3838 Tw (discharge of liabilities, recognition of the contributions as revenues) TjT* 0.0052 Tc 2.4039 Tw (when the conditions are satisfied would appear not to reflect the) TjT* 0.0054 Tc 1.1737 Tw ("earning" of the contributions. Contributions, whether restricted or) TjT* 0.0044 Tc 1.0847 Tw (unrestricted, would appear to be "earned" as goods and services are) TjT* 0.0049 Tc 0.9043 Tw (provided to beneficiaries. Under this approach, where contributions) TjT* 0.0042 Tc 0.9889 Tw (are used to acquire depreciable assets, it would be more appropriate) TjT* 0.0053 Tc 1.2572 Tw (to recognise the contributions as revenues when depreciation of the) TjT* 0.0056 Tc 0.0035 Tw (assets is charged to expense.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A84) Tj28.8 0 TD 0.0051 Tc 0.244 Tw (However, recognition of contributions as revenues when expenses are) Tj0 -10.08 TD 0.0048 Tc 2.1643 Tw (incurred in the provision of goods and services also gives rise to) TjT* 0.0045 Tc 2.2713 Tw (problems. Where contributions are provided for the discharge of) TjT* 0.0051 Tc 2.3774 Tw (liabilities, or where they are provided without conditions, a clear) TjT* 0.0048 Tc 3.2577 Tw (nexus between the contribution and the provision of goods and) TjT* 0.0054 Tc 2.9077 Tw (services would not exist. Allocation of the contributions to the) TjT* 0.0041 Tc 0.8559 Tw (provision of goods and services would be purely arbitrary. Where a) TjT* 0.0049 Tc 0.9206 Tw (contribution is provided on the condition that it be expended on the) TjT* 0.0046 Tc 1.0081 Tw (acquisition of a non-depreciable asset, such as a park or land under) TjT* 0.0048 Tc 4.7744 Tw (infrastructure, this approach would result in recognition of a) TjT* 0.0052 Tc 0.2839 Tw (perpetual liability. In addition, the decision of an entity to dispose of) TjT* 0.0046 Tc 0.9945 Tw (a grant-funded depreciable asset would accelerate the recognition of) TjETendstreamendobj173 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj174 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (88) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0051 Tc 1.714 Tw (revenues vis-a-vis the retention and subsequent depreciation of the) Tj0 -10.08 TD 0.0054 Tc 0.3964 Tw (asset. The effect of this discretion detracts from the comparability of) TjT* 0.0053 Tc 0.2095 Tw (revenue recognition between entities and provides managements with) TjT* 0.0053 Tc 1.5093 Tw (a means of tailoring reported results. Furthermore, if the entity is) TjT* 0.0049 Tc 1.0843 Tw (provided with "seed money", as that term is described in paragraph) TjT* 0.0046 Tc 1.1246 Tw (A80 above, it is problematic whether revenues would be recognised) TjT* 0.0054 Tc 3.0757 Tw (as the initial outlay is depreciated, or whether the "liability for) TjT* 0.0052 Tc 0.8305 Tw (unearned grant revenues" would be maintained indefinitely. This is) TjT* 0.0049 Tc 2.9909 Tw (because it could be argued that the recipient's "performance" in) TjT* 0.0051 Tc 1.044 Tw (respect of the use of the grant is the continued delivery of specified) TjT* 0.0062 Tc 0 Tw (services.) Tj-28.8 -20.16 TD 0.001 Tc (A85) Tj28.8 0 TD 0.0048 Tc 0.0843 Tw (A more pervasive problem with this "earnings-based" approach to the) Tj0 -10.08 TD 0.0056 Tc 0.789 Tw (recognition of contributions is that in a range of circ*mstances, it is) TjT* 0.0049 Tc 0.69 Tw (problematic whether contributions such as grants and appropriations) TjT* 0.0044 Tc 1.7114 Tw (are paid in cognisance of past performance or future performance.) TjT* 0.0046 Tc 1.2481 Tw (For example, a grant may have been provided to restore an entity's) TjT* 0.0047 Tc 1.2344 Tw (capacity to provide services $after its erosion through depreciation$,) TjT* 0.0052 Tc 0.6584 Tw (with conditions that the grant be expended on particular assets so as) TjT* 0.0047 Tc 0.7511 Tw (to provide assurance to the grantor that the service-delivery capacity) TjT* 0.0052 Tc 2.2439 Tw (would be restored. In these situations, it can be argued that the) TjT* 0.0052 Tc 0.2739 Tw (entity's performance in delivering services and incurring expenses, to) TjT* 0.0048 Tc 0.2225 Tw (which the grant relates, has occurred in reporting periods prior to the) TjT* 0.0057 Tc 1.9788 Tw (inflow of the grant. If this were the case, matching of the grant) TjT* 0.0047 Tc 2.9144 Tw (revenue against the entity's performance in providing goods and) TjT* 0.0051 Tc 0.004 Tw (services would not be possible.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A86) Tj28.8 0 TD 0.0052 Tc 0.2139 Tw (These concerns with "earnings-based" approaches are not intended to) Tj0 -10.08 TD 0.0051 Tc 3.244 Tw (imply rejection of the general proposition that contributions are) TjT* 0.0041 Tc 0.6983 Tw (frequently provided in respect of expected future performance by the) TjT* 0.0054 Tc 0.0037 Tw (recipient ) Tj41.04 0 TD /F3 10.08 Tf2.8891 Tc 0 Tw (-) Tj5.52 0 TD /F0 10.08 Tf0.0058 Tc 2.91 Tw ( rather, it reflects a view that reliable and consistent) Tj-46.56 -10.08 TD 0.0054 Tc 1.4874 Tw (matching of the revenues with that performance is not likely to be) Tj0 -10.08 TD 0.0048 Tc 2.4386 Tw (achievable. In addition, adoption of "earnings-based approaches") TjT* 0.0054 Tc 0.0337 Tw (would entail the recognition of "unearned" contributions as liabilities,) TjT* 0.0049 Tc 0.3402 Tw (which, for the reasons discussed above, would involve adoption of an) TjT* 0.0049 Tc 0.0043 Tw (unacceptably broad concept of liabilities.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A87) Tj28.8 0 TD 0.0053 Tc 0.3124 Tw (Some commentators on the superseded Statement expressed concerns) Tj0 -10.08 TD 0.0053 Tc 0.0839 Tw (that recognition of contributions as revenues when control is obtained) TjT* 0.0057 Tc 2.7234 Tw (over them, consistent with the Statement, would result in undue) TjT* 0.0055 Tc 2.297 Tw (volatility in reported results, because the expenses which arise in) TjT* 0.0054 Tc 0.2437 Tw (satisfying any conditions attaching to the contributions frequently are) TjT* 0.0045 Tc 3.8686 Tw (recognised $in part or in full$ in a different reporting period.) TjT* 0.0051 Tc 5.1641 Tw (However, not-for-profit entities are substantially dependent on) TjT* 0.0054 Tc 0.8037 Tw (contributions to fund their operations, and they cannot influence the) TjT* 0.0054 Tc 1.6837 Tw (amount and timing of those inflows in the way that profit-seeking) TjT* 0.0056 Tc 0.6969 Tw (entities obtain inflows through reciprocal transfers $such as sales$ as) TjETendstreamendobj175 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj176 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (89) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0049 Tc 1.3569 Tw (part of their earning activities. The Boards have adopted the view) Tj0 -10.08 TD 0.0053 Tc 0.1238 Tw (that the definition of liabilities should not be broadened to encompass) TjT* 0.0047 Tc 1.4102 Tw ("unearned" contributions merely to overcome concerns of preparers) TjT* 0.0052 Tc 2.1372 Tw (that users may interpret the "bottom line" results of not-for-profit) TjT* 0.0056 Tc 0.1999 Tw (entities as if those entities can influence their period by period results) TjT* 0.0055 Tc 0.0036 Tw (in the manner of a profit-seeking entity.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A88) Tj28.8 0 TD 0.0055 Tc 2.1936 Tw (The notion of matching contributions revenues with expenses has) Tj0 -10.08 TD 0.0047 Tc 0.3645 Tw (been dismissed by the FASB in both SFAC 6 $paragraph 150$ and in) TjT* 0.0029 Tc 0.0063 Tw (SFAS 116 $paragraph 67$.) Tj0 -20.16 TD /F2 10.08 Tf0.0034 Tc 0.0057 Tw (Should contributions be recognised as contributions by owners?) TjET170.88 536.64 260.4 0.48 re fBT142.08 518.16 TD/F0 10.08 Tf0.001 Tc 0 Tw (A89) Tj28.8 0 TD 0.0051 Tc 1.864 Tw (In applying this Statement, contributions received by public sector) Tj0 -10.08 TD 0.0054 Tc 0.7638 Tw (entities would be classified as equity where they are in the nature of) TjT* 0.0053 Tc 3.9638 Tw (contributions by owners; otherwise they would be classified as) TjT* 0.0053 Tc 0.1038 Tw (revenues. It would only be in rare instances that contributions to not-) TjT* 0.005 Tc 0.7961 Tw (for-profit entities would be in the nature of contributions by owners.) TjT* 0.0054 Tc 1.417 Tw (This contrasts with profit-seeking entities in the private and public) TjT* 0.0051 Tc 1.0241 Tw (sectors, where some contributions are provided with the expectation) TjT* 0.0048 Tc 1.7083 Tw (of receiving a desired rate of return, and the contributor possesses) TjT* 0.0052 Tc 2.4573 Tw (rights relating to distributions of future economic benefits by the) TjT* 0.0055 Tc 0.0036 Tw (entity. In such cases, the contributions would be identified as equity.) Tj28.8 -20.16 TD /F2 10.08 Tf0.0035 Tc 0.0056 Tw (Increased operating capability) TjET199.68 405.6 125.04 0.48 re fBT142.08 387.12 TD/F0 10.08 Tf0.001 Tc 0 Tw (A90) Tj28.8 0 TD 0.0051 Tc 0.874 Tw (Some commentators on the superseded Statement argued that where) Tj0 -10.08 TD 0.0048 Tc 5.6443 Tw (contributions are made to a not-for-profit entity without an) TjT* 0.0054 Tc 7.4437 Tw (expectation of financial return but with the intention of) TjT* 0.0052 Tc 2.674 Tw ("permanently" increasing the capacity of the recipient to provide) TjT* 0.0055 Tc 6.9636 Tw (services, those contributions should be classified as equity) TjT* 0.0052 Tc 5.7296 Tw (contributions and other contributions should be classified as) TjT* 0.0052 Tc 0.004 Tw (revenues. This argument was largely based on views that:) Tj0 -20.16 TD 0.0035 Tc 0 Tw ($a$) Tj28.8 0 TD 0.005 Tc 2.5241 Tw (because not-for-profit entities generally are concerned with) Tj0 -10.08 TD 0.0048 Tc 1.9243 Tw (maintaining their capacity to provide goods and services to) TjT* 0.0054 Tc 3.0551 Tw (beneficiaries, rather than generating a financial return on) TjT* 0.005 Tc 0.9641 Tw (contributions received, a physical concept of contributions by) TjT* 0.0042 Tc 0.005 Tw (owners should be adopted; and) Tj-28.8 -20.16 TD 0.0029 Tc 0 Tw ($b$) Tj28.8 0 TD 0.005 Tc 1.547 Tw (recognition of the contributions as revenues is inappropriate) Tj0 -10.08 TD 0.0045 Tc 1.2046 Tw (because they are not "earned" during the reporting period in) TjT* 0.0056 Tc 0.5555 Tw (which the contribution is received. This issue is addressed in) TjT* 0.003 Tc 0.0062 Tw (paragraphs A83 to A88.) Tj-57.6 -20.16 TD 0.001 Tc 0 Tw (A91) Tj28.8 0 TD 0.0059 Tc 0.1232 Tw (Implicit in this argument is the view that contributions which finance) Tj0 -10.08 TD 0.005 Tc 5.5241 Tw (the acquisition of future economic benefits "bundled up" in) TjETendstreamendobj177 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj178 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (90) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-132 484.56 TD 0.0053 Tc 0.0038 Tw (infrastructure assets are different in concept from contributions which) Tj0 -10.08 TD 0.0051 Tc 1.3106 Tw (finance the acquisition of future economic benefits "bundled up" in) TjT* 0.0062 Tc 1.5302 Tw (short-lived assets. That view is inconsistent with the focus of this) TjT* 0.0058 Tc 2.1153 Tw (Statement on the essence of the elements reported rather than on) TjT* 0.0046 Tc 0.3245 Tw (their particular features ) Tj99.36 0 TD /F3 10.08 Tf2.8891 Tc 0 Tw (-) Tj5.52 0 TD /F0 10.08 Tf0.0059 Tc 0.5792 Tw ( in the case of assets, the focus is on future) Tj-104.88 -10.08 TD 0.0053 Tc 2.3505 Tw (economic benefits, however those benefits are "bundled up". All) Tj0 -10.08 TD 0.0059 Tc 1.5632 Tw (contributions "permanently" increase the net assets of the recipient) TjT* 0.0058 Tc 1.0833 Tw (compared with its net assets without the contribution. Whether the) TjT* 0.0053 Tc 0.7772 Tw (recipient retains that increase in operating capability will depend on) TjT* 0.0054 Tc 1.1838 Tw (how it uses those funds and the policies it adopts in recovering the) TjT* 0.0045 Tc 3.4846 Tw (cost of operations $including depreciation of contribution-funded) TjT* 0.006 Tc 5.4965 Tw (non-current assets$. These aspects are not inherent in the) TjT* 0.0051 Tc 1.4441 Tw (contribution. Accordingly, if so-called "capital contributions" were) TjT* 0.0053 Tc 0.6439 Tw (to be classified as "contributions by owners", all contributions would) TjT* 0.0058 Tc 0.0034 Tw (need to be classified as such.) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A92) Tj28.8 0 TD 0.0054 Tc 4.7438 Tw (Irrespective of this concern, there are practical difficulties in) Tj0 -10.08 TD 0.0054 Tc 4.0037 Tw (identifying what was intended to be the increase in operating) TjT* 0.005 Tc 5.7641 Tw (capability resulting from the contribution. For example, if) TjT* 0.0051 Tc 3.292 Tw (contributions are provided to an entity on the condition that it) TjT* 0.0054 Tc 4.3537 Tw (expends them on non-current assets, how does one determine) TjT* 0.0052 Tc 2.8359 Tw (whether, and the extent to which, those funds were provided to) TjT* 0.0044 Tc 2.2181 Tw (restore a loss of operating capability due to previous depreciation) TjT* 0.0044 Tc 0.2619 Tw ($that is, enable a similar rate of output but over a longer period$ or to) TjT* 0.0055 Tc 0.7018 Tw (increase the entity's rate of service delivery? This difficulty is noted) TjT* 0.0053 Tc 3.7838 Tw (in FASB Statement of Financial Accounting Standards No. 33) TjT* 0.0047 Tc 5.8845 Tw ("Financial Reporting and Changing Prices" $paragraph 131$.) TjT* 0.0054 Tc 3.4971 Tw (Expressed another way: what is the economic substance of the) TjT* 0.0052 Tc 0.0759 Tw ("difference" between a contribution to enable an entity to acquire new) TjT* 0.005 Tc 0.5242 Tw (equipment and a contribution to enable an entity to pay the wages of) TjT* 0.0048 Tc 0.0043 Tw (employees who repair existing equipment?) Tj-28.8 -20.16 TD 0.001 Tc 0 Tw (A93) Tj28.8 0 TD 0.0065 Tc 1.8026 Tw (If the establishment of a financial interest in the net assets of the) Tj0 -10.08 TD 0.0051 Tc 0.8718 Tw (recipient and a right to a financial return were not to be retained in) TjT* 0.006 Tc 0.3931 Tw (this Statement as essential characteristics of contributions by owners,) TjT* 0.0049 Tc 4.0843 Tw (all contributions $including, for example, periodic contributions) TjT* 0.0052 Tc 0.9939 Tw (received by clubs and professional associations from their members,) TjT* 0.0046 Tc 1.7745 Tw (and grants and appropriations received by not-for-profit entities in) TjT* 0.0048 Tc 1.5643 Tw (the public sector$ would be identified as equity contributions. Not) TjT* 0.0049 Tc 0.9206 Tw (only would the meaning of contributed equity be less clear, but not-) TjT* 0.0048 Tc 0.0763 Tw (for-profit entities would report recurring deficits for the change in net) TjT* 0.0053 Tc 0.3638 Tw (assets resulting from operations ) Tj132.96 0 TD /F3 10.08 Tf2.8891 Tc 0 Tw (-) Tj5.52 0 TD /F0 10.08 Tf0.005 Tc 0.5184 Tw ( that is, non-recovery of part of the) Tj-138.48 -10.08 TD 0.0041 Tc 1.493 Tw (cost of goods and services provided) Tj0 Tc 0.0091 Tw ( ) Tj154.56 0 TD /F3 10.08 Tf2.8891 Tc 0 Tw (-) Tj5.52 0 TD /F0 10.08 Tf0.0057 Tc 1.6834 Tw ( with a consequential loss of) Tj-160.08 -10.08 TD 0.0058 Tc 0.0034 Tw (usefulness of the operating statement.) Tj0 -20.16 TD /F2 10.08 Tf0.0044 Tc 0.0048 Tw (Role of disclosure) TjET170.88 193.92 73.2 0.48 re fendstreamendobj179 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj180 0 obj<>streamBT286.8 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (91) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-160.8 484.56 TD 0.001 Tc 0 Tw (A94) Tj28.8 0 TD 0.005 Tc 0.7721 Tw (In adopting the policies reflected ) Tj140.4 0 TD 0.0064 Tc 1.0427 Tw (in this Statement in respect of the) Tj-140.4 -10.08 TD 0.0054 Tc 5.3904 Tw (treatment of contributions, the Boards are of the view that) Tj0 -10.08 TD 0.0051 Tc 8.964 Tw (information about restrictions over contributions is more) TjT* 0.0048 Tc 1.1143 Tw (appropriately conveyed by disclosure of restrictions over assets than) TjT* 0.0052 Tc 0.2706 Tw (by broadening the concepts of liabilities and contributions by owners.) TjT* 0.0048 Tc 4.6177 Tw (In addition, separate disclosure of the nature and amount of) TjT* 0.0051 Tc 1.8897 Tw (contributions recognised as revenues, together with structuring the) TjT* 0.0049 Tc 1.3242 Tw (operating statement to report results of not-for-profit entities before) TjT* 0.0049 Tc 1.1387 Tw (and after contributions, is a more appropriate way to assist users to) TjT* 0.005 Tc 1.0121 Tw (place in context revenues reported in respect of contributions. This) TjT* 0.0046 Tc 1.8645 Tw (approach is reflected in Australian Accounting Standards AAS 27) TjT* 0.0052 Tc 0.244 Tw ("Financial Reporting by Local Governments" and AAS 29 "Financial) TjT* 0.0051 Tc 0.0041 Tw (Reporting by Government Departments".) 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Tj0 -6.96 TD -0.106 Tc 0 Tw (83$) TjETq 554.4 453.12 23.28 6.72 re h W n BT554.4 454.32 TD0.0378 Tc 3.6362 Tw (Losses are decreases in equity/net assets from) TjETQ q 554.4 446.16 23.28 6.72 re h W n BT554.4 447.36 TD-0.0283 Tc 3.9823 Tw (peripheral or incidental transactions and events) TjETQ q 554.4 439.2 23.28 6.72 re h W n BT554.4 440.4 TD-0.0176 Tc 1.8459 Tw (affecting an entity and from all other transactions,) TjETQ q 554.4 432.24 23.28 6.72 re h W n BT554.4 433.44 TD0.0162 Tc 1.2178 Tw (events and circ*mstances affecting the entity except) TjETQ q 554.4 425.28 23.28 6.72 re h W n BT554.4 426.48 TD0.0271 Tc 1.8011 Tw (those that result from expenses or distributions of) TjETQ q 554.4 418.08 23.28 6.96 re h W n BT554.4 419.52 TD-0.0058 Tc -0.1202 Tw (equity/net assets. $para. 40$) TjETQ 159.84 390.48 0.72 69.6 re f159.84 389.76 0.72 0.72 re f159.84 389.76 0.72 0.72 re f160.56 389.76 72.72 0.72 re f233.28 390.48 0.72 69.6 re f233.28 389.76 0.72 0.72 re f234 389.76 81.36 0.72 re f315.36 390.48 0.72 69.6 re f315.36 389.76 0.72 0.72 re f316.08 389.76 85.2 0.72 re f401.28 390.48 0.72 69.6 re f401.28 389.76 0.72 0.72 re f402 389.76 66.48 0.72 re f468.48 390.48 0.72 69.6 re f468.48 389.76 0.72 0.72 re f469.2 389.76 79.2 0.72 re f548.4 390.48 0.72 69.6 re f548.4 389.76 0.72 0.72 re f549.12 389.76 28.56 0.72 re fendstreamendobj187 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj188 0 obj<>streamBT400.56 287.76 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0.0058 Tw (- ) Tj6 0 TD 0 Tc 0 Tw (95) Tj10.08 0 TD 0.0034 Tc 0.0058 Tw ( -) Tj-185.28 282.48 TD /F1 10.08 Tf0.0056 Tc 0.0036 Tw (TABLE ) Tj36.96 0 TD /F5 10.08 Tf2.8872 Tc 0 Tw (-) TjETq 274.08 568.08 303.6 11.52 re h W n BT274.08 570.24 TD/F1 10.08 Tf0.0041 Tc 0.005 Tw ( International Comparison: Conceptual Framework Recognition Criteria) TjETQ BT165.84 552.96 TD/F0 6 Tf-0.093 Tc (Australia:) Tj36 0 TD -0.0162 Tc -0.1098 Tw (New Zealand) Tj-36 -6.96 TD 0.0144 Tc -0.1404 Tw (SAC 4 &) Tj36 0 TD 0.0147 Tc 0 Tw (Statement) TjETq 257.76 551.76 68.4 6.72 re h W n BT257.76 552.96 TD0.0303 Tc 1.1237 Tw (IASC Framework & South) TjETQ BT257.76 546 TD-0.0385 Tc -0.0875 Tw (Africa: Section AC 000) Tj79.2 6.96 TD 0 Tc -0.1266 Tw (United States: SFAC No. 5) Tj142.32 0 TD -0.0065 Tc -0.1195 Tw (United Kingdom) Tj0 -6.96 TD -0.0274 Tc -0.0986 Tw (Draft Framework: Chapter 4) TjET159.84 561.12 0.72 0.72 re f159.84 561.12 0.72 0.72 re f160.56 561.12 91.44 0.72 re f252 561.12 0.72 0.72 re f252.72 561.12 78.48 0.72 re f331.2 561.12 0.72 0.72 re f331.92 561.12 141.36 0.72 re f473.28 561.12 0.72 0.72 re f474 561.12 100.32 0.72 re f574.32 561.12 0.72 0.72 re f575.04 561.12 2.64 0.72 re f159.84 542.4 0.72 18.72 re f252 542.4 0.72 18.72 re f331.2 542.4 0.72 18.72 re f473.28 542.4 0.72 18.72 re f574.32 542.4 0.72 18.72 re fBT165.84 534.72 TD-0.0099 Tc 0.3159 Tw (An item that meets the definition) TjETq 165.84 526.56 81.12 6.72 re h W n BT165.84 527.76 TD0.0474 Tc 5.7066 Tw (of an element should be) TjETQ BT165.84 520.8 TD0.0256 Tc -0.1516 Tw (recognised when and only when:) TjETq 257.76 533.52 68.4 6.72 re h W n BT257.76 534.72 TD0.0043 Tc 3.3497 Tw (An item that meets the) TjETQ q 257.76 526.56 68.4 6.72 re h W n BT257.76 527.76 TD-0.006 Tc 3.64 Tw (definition of an element) TjETQ BT257.76 520.8 TD0.0137 Tc -0.1397 Tw (should be recognised if:) TjETq 336.96 533.52 131.52 6.72 re h W n BT336.96 534.72 TD0.0173 Tc 1.0867 Tw (An item and information about it should meet four) TjETQ q 336.96 526.56 131.52 6.72 re h W n BT336.96 527.76 TD-0.0156 Tc 0.4896 Tw (fundamental recognition criteria to be recognized and) TjETQ q 336.96 519.6 131.52 6.72 re h W n BT336.96 520.8 TD-0.0087 Tc 2.5227 Tw (should be recognized when the criteria are met,) TjETQ q 336.96 512.64 131.52 6.72 re h W n BT336.96 513.84 TD0.0103 Tc 0.9608 Tw (subject to a cost-benefit constraint and a materiality) TjETQ BT336.96 506.88 TD-0.054 Tc -0.072 Tw (threshold. Those criteria are:) TjETq 479.28 533.52 90.24 6.72 re h W n BT479.28 534.72 TD0.0136 Tc 2.3564 Tw (An item should be recognised in) TjETQ BT479.28 527.76 TD-0.0469 Tc -0.0791 Tw (financial statements if:) TjET159.84 541.68 0.72 0.72 re f160.56 541.68 91.44 0.72 re f252 541.68 0.72 0.72 re f252.72 541.68 78.48 0.72 re f331.2 541.68 0.72 0.72 re f331.92 541.68 141.36 0.72 re f473.28 541.68 0.72 0.72 re f474 541.68 100.32 0.72 re f574.32 541.68 0.72 0.72 re f575.04 541.68 2.64 0.72 re f159.84 504.48 0.72 37.2 re f252 504.48 0.72 37.2 re f331.2 504.48 0.72 37.2 re f473.28 504.48 0.72 37.2 re f574.32 504.48 0.72 37.2 re fBT336.96 496.8 TD-0.052 Tc -0.074 Tw (Definitions \226) Tj36 0 TD -0.007 Tc 1.841 Tw (The item meets the definition of an) Tj0 -7.92 TD -0.0093 Tc -0.1167 Tw (element of financial statements;) Tj76.08 3.12 TD /F0 7.92 Tf0.12 Tc 0 Tw (2) Tj30.24 4.8 TD /F0 6 Tf-0.076 Tc ($a$) Tj14.4 0 TD 0.0078 Tc 0.0582 Tw (the item meets the definition of) Tj0 -7.92 TD -0.0312 Tc 7.0252 Tw (an element of financial) TjT* 0.024 Tc 0 Tw (statements;) TjET159.84 478.32 0.72 26.16 re f252 478.32 0.72 26.16 re f331.2 478.32 0.72 26.16 re f473.28 478.32 0.72 26.16 re f574.32 478.32 0.72 26.16 re fBT165.84 471.36 TD-0.076 Tc ($a$) Tj14.4 0 TD -0.0012 Tc -0.0288 Tw (it is probable that the future) Tj0 -6.96 TD 0.0413 Tc -0.0073 Tw (economic benefits or future) TjETq 180.24 456.24 66.72 6.72 re h W n BT180.24 457.44 TD0.0243 Tc 1.7697 Tw (sacrifice of those benefits) TjETQ q 180.24 449.28 66.72 6.72 re h W n BT180.24 450.48 TD-0.0346 Tc 2.6686 Tw (will eventuate, or that a) TjETQ q 180.24 442.32 66.72 6.72 re h W n BT180.24 443.52 TD0.0149 Tc 2.8191 Tw (change in those benefits) TjETQ BT180.24 436.56 TD0.0204 Tc -0.1464 Tw (has occurred; and) Tj77.52 34.8 TD -0.076 Tc 0 Tw ($a$) Tj14.4 0 TD 0.0073 Tc 0.4067 Tw (it is probable that any) TjETq 272.16 463.2 54 6.72 re h W n BT272.16 464.4 TD0.048 Tc 14.466 Tw (future economic) TjETQ q 272.16 456.24 54 6.72 re h W n BT272.16 457.44 TD0.0282 Tc 11.1258 Tw (benefit associated) TjETQ BT272.16 450.48 TD-0.0338 Tc -0.0322 Tw (with the item will flow) TjETq 272.16 442.32 54 6.72 re h W n BT272.16 443.52 TD0.0453 Tc 6.7087 Tw (to or from the) TjETQ BT272.16 436.56 TD-0.0219 Tc -0.1041 Tw (enterprise; and) Tj207.12 34.8 TD 0.036 Tc 0 Tw ($b$) Tj14.4 0 TD -0.0122 Tc 0.3062 Tw (there is sufficient evidence that) TjETq 493.68 463.2 75.84 6.72 re h W n BT493.68 464.4 TD0.0013 Tc 5.3327 Tw (the change in assets or) TjETQ q 493.68 456.24 75.84 6.72 re h W n BT493.68 457.44 TD-0.075 Tc 1.629 Tw (liabilities inherent in the item) TjETQ BT493.68 450.48 TD-0.0173 Tc 0.5313 Tw (has occurred $including, where) TjETq 493.68 442.32 75.84 6.72 re h W n BT493.68 443.52 TD-0.0158 Tc 3.1698 Tw (appropriate, evidence that a) TjETQ q 493.68 435.36 76.56 6.72 re h W n BT493.68 436.56 TD0.0454 Tc 2.7086 Tw (future inflow or outflow of) TjETQ BT493.68 429.6 TD-0.0117 Tc -0.1143 Tw (benefit will occur$; and) TjET159.84 424.8 0.72 53.52 re f252 424.8 0.72 53.52 re f331.2 424.8 0.72 53.52 re f473.28 424.8 0.72 53.52 re f574.32 424.8 0.72 53.52 re fq 165.84 416.64 6.96 6.72 re h W n BT165.84 417.84 TD0.036 Tc 0 Tw ($b$) TjETQ q 180.24 416.64 66.72 6.72 re h W n BT180.24 417.84 TD0.0252 Tc 1.2288 Tw (the item can be measured) TjETQ BT180.24 410.88 TD-0.054 Tc 0 Tw (reliably.) Tj77.52 6.96 TD 0.036 Tc ($b$) Tj14.4 0 TD 0.0184 Tc 0.4796 Tw (the item has a cost or) TjETq 272.16 409.68 54 6.72 re h W n BT272.16 410.88 TD0.003 Tc 4.431 Tw (value that can be) TjETQ q 272.16 402.72 54 6.72 re h W n BT272.16 403.92 TD0.0135 Tc 18.5805 Tw (measured with) TjETQ BT272.16 396.96 TD-0.0869 Tc -0.0391 Tw (reliability. $para. 83$) TjETq 336.96 416.64 37.44 6.72 re h W n BT336.96 417.84 TD-0.0377 Tc -0.0883 Tw (Measurability \226) TjETQ q 387.36 416.64 81.12 6.72 re h W n BT387.36 417.84 TD-0.0344 Tc 5.4284 Tw (It has a relevant attribute) TjETQ q 387.36 409.68 81.12 6.72 re h W n BT387.36 410.88 TD-0.0045 Tc 8.8785 Tw (measurable with sufficient) TjETQ BT387.36 403.92 TD-0.08 Tc 0 Tw (reliability;) TjETq 479.28 416.64 6.48 6.72 re h W n BT479.28 417.84 TD-0.028 Tc ($c$) TjETQ q 493.68 416.64 75.84 6.72 re h W n BT493.68 417.84 TD0.0143 Tc 0.6597 Tw (the item can be measured at a) TjETQ q 493.68 409.68 75.84 6.72 re h W n BT493.68 410.88 TD0.0393 Tc 10.2747 Tw (monetary amount with) TjETQ BT493.68 403.92 TD-0.0592 Tc -0.0668 Tw (sufficient reliability. $para. 4$) TjET159.84 392.16 0.72 32.64 re f252 392.16 0.72 32.64 re f331.2 392.16 0.72 32.64 re f473.28 392.16 0.72 32.64 re f574.32 392.16 0.72 32.64 re fq 336.96 384 29.28 6.72 re h W n BT336.96 385.2 TD-0.0126 Tc -0.1134 Tw (Relevance \226) TjETQ q 387.36 384 81.12 6.72 re h W n BT387.36 385.2 TD-0.0183 Tc 4.2123 Tw (The information about it is) TjETQ BT387.36 378.24 TD-0.0141 Tc 0.2241 Tw (capable of making a difference in) Tj0 -6.96 TD 0.0176 Tc -0.1436 Tw (user decisions; and) TjET159.84 368.88 0.72 23.28 re f252 368.88 0.72 23.28 re f331.2 368.88 0.72 23.28 re f473.28 368.88 0.72 23.28 re f574.32 368.88 0.72 23.28 re fq 336.96 360.72 29.04 6.72 re h W n BT336.96 361.92 TD-0.0655 Tc -0.0605 Tw (Reliability \226) TjETQ q 387.36 360.72 81.12 6.72 re h W n BT387.36 361.92 TD-0.0416 Tc 18.3956 Tw (The information is) TjETQ q 387.36 353.76 81.12 6.72 re h W n BT387.36 354.96 TD-0.0333 Tc 18.1473 Tw (representationally faithful,) TjETQ BT387.36 348 TD-0.065 Tc -0.061 Tw (verifiable, and neutral. $para. 63$) TjET159.84 345.6 0.72 23.28 re f159.84 344.88 0.72 0.72 re f159.84 344.88 0.72 0.72 re f160.56 344.88 91.44 0.72 re f252 345.6 0.72 23.28 re f252 344.88 0.72 0.72 re f252.72 344.88 78.48 0.72 re f331.2 345.6 0.72 23.28 re f331.2 344.88 0.72 0.72 re f331.92 344.88 141.36 0.72 re f473.28 345.6 0.72 23.28 re f473.28 344.88 0.72 0.72 re f474 344.88 100.32 0.72 re f574.32 345.6 0.72 23.28 re f574.32 344.88 0.72 0.72 re f575.04 344.88 2.64 0.72 re fBT165.84 335.76 TD/F0 10.08 Tf0 Tc 0.0091 Tw ( ) Tj79.2 0 TD ( ) TjET165.84 337.92 144 0.48 re fBT165.84 331.2 TD/F0 7.92 Tf0.12 Tc 0 Tw (1) Tj4.08 -3.12 TD /F0 6 Tf0 Tc -0.126 Tw ( ) TjETq 180.24 326.64 397.44 6.96 re h W n BT180.24 328.08 TD-0 Tc 0.427 Tw (SAC 4 and the New Zealand Statement of Concepts do not specify general criteria for recognition of the elements of financial statements. The general criteria set out here are a summary of the) TjETQ q 180.24 319.68 397.44 6.96 re h W n BT180.24 321.12 TD-0.0173 Tc -0.1087 Tw (recognition criteria specified in those Statements in respect of each element other than equity. Those particular recognition criteria are virtually identical in respect of both Statements.) TjETQ BT165.84 317.28 TD/F0 7.92 Tf0.12 Tc 0 Tw (2) Tj4.08 -3.12 TD /F0 6 Tf0 Tc -0.126 Tw ( ) Tj10.32 0 TD -0.0057 Tc 0.2674 Tw (The definitions of assets and liabilities in SFAC 6 incorporate the concept of ) Tj189.36 0 TD /F2 6 Tf0 Tc 0 Tw (probable) Tj21.6 0 TD /F0 6 Tf0.0391 Tc 0.2189 Tw ( future economic benefits and ) Tj75.36 0 TD /F2 6 Tf0 Tc 0 Tw (probable) TjETq 488.16 312.72 89.52 6.96 re h W n BT488.16 314.16 TD/F0 6 Tf0.0279 Tc 0.3261 Tw ( future sacrifices of economic benefits. The concept of "probable" is) TjETQ BT180.24 307.2 TD/F0 6 Tf-0.0098 Tc -0.1162 Tw (implicit in the definitions of the other elements in SFAC 6, because those elements are defined in terms of changes in assets and liabilities.) TjETendstreamendobj189 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj190 0 obj<>streamBT289.44 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0 Tw (-) Tj3.36 0 TD 0 Tc (96) Tj10.08 0 TD 0.0034 Tc (-) TjETendstreamendobj191 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj192 0 obj<>streamBT289.44 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0 Tw (-) Tj3.36 0 TD 0 Tc (97) Tj10.08 0 TD 0.0034 Tc (-) Tj-49.2 484.56 TD /F4 10.08 Tf0.0063 Tc 0.0028 Tw (DISSENTING VIEW) Tj-111.6 -20.16 TD /F0 10.08 Tf0.0047 Tc 0.6978 Tw (The Australian Accounting Standards Board $AASB$ and the Public Sector) Tj0 -10.08 TD 0.0045 Tc 1.4146 Tw (Accounting Standards Board $PSASB$ approved the revised Statement for) TjT* 0.0053 Tc 1.8684 Tw (issue in March 1995. Mr Lonergan, a member of the AASB, wishes to) TjT* 0.0056 Tc 0.0036 Tw (express a dissenting view.) Tj0 -20.16 TD /F1 10.08 Tf0.0052 Tc 0.0039 Tw (Dissenting View) TjT* /F0 10.08 Tf0.0051 Tc 0.7241 Tw (Mr Lonergan dissented from the revised SAC 4 $hereinafter "SAC 4"$. He) Tj0 -10.08 TD 0.0048 Tc 1.5643 Tw (strongly supports the work of the AASB and the PSASB in developing a) TjT* 0.0049 Tc 2.1109 Tw (conceptual framework, and believes that $except for the matters outlined) TjT* 0.0044 Tc 3.6484 Tw (below$ SAC 4 will provide useful guidance to the Boards and other) TjT* 0.0055 Tc 2.6703 Tw (interested parties in analysing financial reporting issues. However, Mr) TjT* 0.0048 Tc 1.3586 Tw (Lonergan was unable to vote in favour of the issue of SAC 4, because he) TjT* 0.0061 Tc 0.0031 Tw (believes that:) Tj0 -20.16 TD 0.0035 Tc 0 Tw ($a$) Tj28.8 0 TD 0.0055 Tc 5.8665 Tw (the definitions of liabilities and revenues require significant) Tj0 -10.08 TD 0.006 Tc 0 Tw (amendment;) Tj-28.8 -20.16 TD 0.0029 Tc ($b$) Tj28.8 0 TD 0.0054 Tc 0.6338 Tw (application of the definitions of liabilities and revenues wo) Tj242.64 0 TD 0.0041 Tc 0.725 Tw (uld create) Tj-242.64 -10.08 TD 0.0053 Tc 1.0667 Tw (unnecessary problems in some areas where conventional accounting) Tj0 -10.08 TD 0.005 Tc 1.8708 Tw (practice is already well established and, for all practical purposes,) TjT* 0.0044 Tc 0.0047 Tw (soundly based; and) Tj-28.8 -20.16 TD 0.0042 Tc 0 Tw ($c$) Tj28.8 0 TD 0.0053 Tc 4.5638 Tw (SAC 4 should place much more emphasis on the "matching) Tj0 -10.08 TD 0.0054 Tc 0 Tw (principle".) Tj-28.8 -30.24 TD /F2 10.08 Tf0.0049 Tc 0.0042 Tw (Definition of Liabilities) TjET142.08 355.2 95.52 0.48 re fBT142.08 336.72 TD/F0 10.08 Tf0.0053 Tc 0.5492 Tw (Mr Lonergan believes that the definition of "liability" in the Framework for) Tj0 -10.08 TD 0.0057 Tc 2.6167 Tw (the Preparation and Presentation of Financial Statements, issued by the) TjT* 0.0052 Tc 1.7439 Tw (International Accounting Standards Committee $IASC$, is superior to the) TjT* 0.0059 Tc 0.0032 Tw (definition of "liabilities" in SAC 4. The IASC definition is:) Tj28.8 -20.16 TD 0.0053 Tc 0.1784 Tw ("A 'liability' is a present obligation of the enterprise arising from past) Tj0 -10.08 TD 0.0058 Tc 1.6833 Tw (events, the settlement of which is expected to result in an outflow) TjT* 0.0052 Tc 0.0039 Tw (from the enterprise of resources embodying economic benefits.") Tj-28.8 -20.16 TD 0.0058 Tc 0.3805 Tw (Mr Lonergan is of the view that while the IASC definition is not perfect, its) Tj0 -10.08 TD 0.0048 Tc 0.6807 Tw (adoption would avoid the following flaws which he argues are contained in) TjT* 0.0061 Tc 0.003 Tw (the definition of liabilities in SAC) Tj138.24 0 TD 0.0036 Tc 0.0055 Tw ( 4:) Tj-138.24 -20.16 TD 0.0046 Tc 0 Tw ($i$) Tj28.8 0 TD 0.0055 Tc 1.7903 Tw (The inclusion and position of the phrase "to other enti) Tj235.2 0 TD 0.0074 Tc 1.9217 Tw (ties" in the) Tj-235.2 -10.08 TD 0.0061 Tc 1.0285 Tw (definition of liabilities in SAC 4 makes that definition, in his view,) Tj0 -10.08 TD 0.0057 Tc 1.5634 Tw (too restrictive. Mr Lonergan notes that the definition of liabilities) TjETendstreamendobj193 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj194 0 obj<>streamBT289.44 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0 Tw (-) Tj3.36 0 TD 0 Tc (98) Tj10.08 0 TD 0.0034 Tc (-) Tj-132 484.56 TD 0.0059 Tc 0.5793 Tw (requires that the entity is ) Tj107.04 0 TD /F2 10.08 Tf0.004 Tc 0.3652 Tw (presently obliged ) Tj74.4 0 TD /F0 10.08 Tf0.0049 Tc 0.8043 Tw (to make future sacrifices) Tj-181.44 -10.08 TD 0.0057 Tc 0.6435 Tw (of economic benefits ) Tj88.8 0 TD /F2 10.08 Tf0.0049 Tc 1.0842 Tw (to other entities) Tj0 Tc 0.0091 Tw ( ) Tj70.08 0 TD /F0 10.08 Tf0.0045 Tc 1.2046 Tw ($emphasis added$. He argues) Tj-158.88 -10.08 TD 0.0056 Tc 0.2435 Tw (that the SAC 4 definition excludes items that traditionally have been,) Tj0 -10.08 TD 0.0054 Tc 0.5928 Tw (and should continue to be, recognised as liabilities. He is concerned) TjT* 0.0053 Tc 2.142 Tw (that, for example, a statute may impose upon the entity a legally) TjT* 0.0056 Tc 0.4569 Tw (enforceable obligation which nevertheless does not satisfy the SAC 4) TjT* 0.0054 Tc 3.7371 Tw (definition of liabilities. Similarly, he notes that paragraph 60) TjT* 0.0056 Tc 2.0545 Tw (indicates that the intention by an entity to undertake work in the) TjT* 0.0052 Tc 1.7208 Tw (future does not of itself give rise to a liability because there is no) TjT* 0.0049 Tc 1.9482 Tw (present obligation to an external party. Therefore, he argues, the) TjT* 0.0053 Tc 0 Tw (SAC) Tj19.44 0 TD 0.0054 Tc 0.8677 Tw ( 4 definition of liabilities means that provisions for future costs) Tj-19.44 -10.08 TD 0.0051 Tc 0.904 Tw (and the like would be treated as giving rise neither to liabilities nor) Tj0 -10.08 TD 0.0047 Tc 0.0044 Tw (expenses until related expenditures are incurred.) Tj0 -20.16 TD 0.0053 Tc 0.6518 Tw (Mr Lonergan argues that there is a subtle, but significant, difference) Tj0 -10.08 TD 0.0049 Tc 1.0602 Tw (between a present obligation to make a future sacrifice of economic) TjT* 0.0056 Tc 3.0756 Tw (benefits to other entities $the obligation included in the SAC 4) TjT* 0.005 Tc 0.5277 Tw (definition$ and a present obligation to other entities to make a future) TjT* 0.0052 Tc 0.5106 Tw (sacrifice of economic benefits $his preferred notion of an obligation$.) TjT* 0.0057 Tc 0.8435 Tw (That is, he argues, an entity can have an obligation to other entities) TjT* 0.0046 Tc 1.0245 Tw ($for example, due to regulatory requirements such as environmental) TjT* 0.0051 Tc 1.204 Tw (laws$ to make a future sacrifice of economic benefits without being) TjT* 0.0054 Tc 2.1855 Tw (obliged to make that sacrifice to those entities. For example, an) TjT* 0.0052 Tc 1.6359 Tw (entity may undertake an environmental clean up itself. He argues) TjT* 0.0061 Tc 5.193 Tw (that in these circ*mstances, the entity should recognise that) TjT* 0.0053 Tc 0.4402 Tw (obligation as a liability, but believes that the SAC 4 definition would) TjT* 0.0047 Tc 0.0044 Tw (preclude such recognition.) Tj-28.8 -20.16 TD 0.0053 Tc 0 Tw ($ii$) Tj28.8 0 TD 0.0055 Tc 1.9436 Tw (In his view, the position of the word "future" in the definition of) Tj0 -10.08 TD 0.0051 Tc 1.3332 Tw (liabilities appears to be wrong. Mr Lonergan is of the view that a) TjT* 0.0053 Tc 1.2519 Tw (liability should not be a "future sacrifice of economic benefits", but) TjT* 0.0053 Tc 0.3747 Tw (rather, a "sacrifice of future economic benefits". He argues that such) TjT* 0.0057 Tc 0.7234 Tw (an amendment to the definition would make it symmetrical with the) TjT* 0.0063 Tc 0.0028 Tw (definition of assets.) Tj-28.8 -20.16 TD 0.0057 Tc 2.2725 Tw (Mr Lonergan also believes that the definition of "liability" in the IASC) Tj0 -10.08 TD 0.0058 Tc 1.247 Tw (Framework contains a flaw in common with the definition of liabilities in) TjT* 0.0057 Tc 0.3962 Tw (SAC 4. He believes that the distinction made between "present obligations") TjT* 0.0052 Tc 2.4694 Tw (and "future commitments" both in SAC 4 and the IASC Framework is) TjT* 0.0054 Tc 1.4437 Tw (artificial and difficult to justify on theoretical grounds. He notes that the) TjT* 0.0053 Tc 1.6305 Tw (Statements explain the meaning of "obligations" to extend beyond legally) TjT* 0.0051 Tc 0.904 Tw (enforceable obligations to include obligations arising from normal business) TjT* 0.0052 Tc 0.0039 Tw (practice, custom and a desire to maintain good business relations or act in an) TjT* 0.0056 Tc 1.6835 Tw (equitable manner. He believes that such an extension of the meaning of) TjT* 0.0055 Tc 0.8436 Tw ("obligations" automatically includes future commitments in the meaning of) TjT* 0.0063 Tc 0.0028 Tw (that term.) TjETendstreamendobj195 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj196 0 obj<>streamBT289.44 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0 Tw (-) Tj3.36 0 TD 0 Tc (99) Tj10.08 0 TD 0.0034 Tc (-) Tj-160.8 484.56 TD 0.0056 Tc 0.6362 Tw (Mr Lonergan notes that amending the definition of liabilities to address his) Tj0 -10.08 TD 0.005 Tc 0.8681 Tw (concerns outlined above may mean that the definition would be interpreted) TjT* 0.005 Tc 1.2281 Tw (to permit some provisions which are really profit-smoothing charges to be) TjT* 0.0053 Tc 0.5039 Tw (identified as liabilities. He believes that this problem could be overcome by) TjT* 0.0048 Tc 2.8576 Tw (issuing a specific Accounting Standard on provisions and by including) TjT* 0.0047 Tc 0.1135 Tw (appropriate commentary in SAC 4 that such provisions should not be treated) TjT* 0.0056 Tc 2.5998 Tw (as liabilities. He also believes that this problem could be substantially) TjT* 0.0051 Tc 0.1786 Tw (overcome if greater emphasis were to be placed on the "matching principle".) TjT* 0.0055 Tc 1.5745 Tw (Mr Lonergan's views on the "matching principle" are outlined in the last) TjT* 0.0063 Tc 0.0028 Tw (section of this dissenting view.) Tj0 -30.24 TD /F2 10.08 Tf0.0038 Tc 0.0054 Tw (Definition of Revenues) TjET142.08 526.56 92.64 0.48 re fBT142.08 508.08 TD/F0 10.08 Tf0.0056 Tc 0.9635 Tw (Mr Lonergan is of the view that the definition of revenues in Statement of) Tj0 -10.08 TD 0.0059 Tc 1.5333 Tw (Financial Accounting Concepts No. 6 "Elements of Financial Statements") TjT* 0.005 Tc 1.9774 Tw ($SFAC 6$, issued by the Financial Accounting Standards Board $FASB$,) TjT* 0.005 Tc 0.0041 Tw (should be adopted in SAC 4. That definition is:) Tj28.8 -20.16 TD 0.0058 Tc 0.1996 Tw ("Revenues are inflows or other enhancements of assets of an entity o) Tj279.36 0 TD 0.0014 Tc 0 Tw (r) Tj-279.36 -10.08 TD 0.0057 Tc 4.8301 Tw (settlements of its liabilities $or a combination of both$ from) Tj0 -10.08 TD 0.0045 Tc 0.7246 Tw (delivering or producing goods, rendering services, or other activities) TjT* 0.0055 Tc 0.0036 Tw (that constitute the entity's ongoing major or central operations.") Tj-28.8 -20.16 TD 0.0052 Tc 2.0199 Tw (Mr Lonergan believes that there are two fundamental problems with the) Tj0 -10.08 TD 0.0048 Tc 0.6043 Tw (definition of revenues in SAC 4, which would be overcome by adopting the) TjT* 0.0055 Tc 0.6497 Tw (SFAC 6 definition. These are set out below. Consistent with the approach) TjT* 0.0049 Tc 1.2442 Tw (adopted in SFAC 6, he supports the defining of revenues and expenses as) TjT* 0.006 Tc 0.0031 Tw (separate elements from "gains" and "losses".) Tj0 -20.16 TD 0.0046 Tc 0 Tw ($i$) Tj28.8 0 TD /F2 10.08 Tf0.0044 Tc 0.0047 Tw ("Increase in equity") TjET170.88 345.12 80.88 0.48 re fBT142.08 326.64 TD/F0 10.08 Tf0.0053 Tc 0.1516 Tw (Mr Lonergan believes that the definition of revenues in SAC 4 does not help) Tj0 -10.08 TD 0.0051 Tc 0.079 Tw (explain why a cash sale of inventory at its book value gives rise to an item of) TjT* 0.0041 Tc 0.485 Tw (revenue and ) Tj53.76 0 TD /F2 10.08 Tf0.005 Tc 0.0042 Tw (yet ) Tj15.6 0 TD /F0 10.08 Tf0.0051 Tc 1.0841 Tw (a cash settlement by a debtor of the full amount of a debt) Tj-69.36 -10.08 TD 0.0054 Tc 0.4837 Tw (does not give rise to an item of revenue. He believes that if the words "that) Tj0 -10.08 TD 0.0057 Tc 1.2435 Tw (result in an increase in equity" are intended to cover this distinction, they) TjT* 0.0053 Tc 0.7438 Tw (are inadequate. He believes that the requirement that an increase in equity) TjT* 0.0051 Tc 0.2255 Tw (must occur for an item to satisfy the definition of revenues should be deleted) TjT* 0.0054 Tc 0.4666 Tw (on the grounds that potentially it is too restrictive. For example, the sale of) TjT* 0.0047 Tc 1.4444 Tw (inventories or factoring of receivables for a consideration exactly equal to) TjT* 0.0046 Tc 0.946 Tw (their current book value may not give rise to an "increase in equity during) TjT* 0.0055 Tc 0.5836 Tw (the reporting period". Mr Lonergan believes that on this basis, many items) TjT* 0.0051 Tc 0.028 Tw (that should be treated as revenues, and which under conventional accounting) TjT* 0.0051 Tc 0.9203 Tw (are treated as revenues, may be interpreted as falling outside the definition) TjT* 0.0051 Tc 0.0041 Tw (of revenues in SAC 4.) TjETendstreamendobj197 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj198 0 obj<>streamBT287.04 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0 Tw (-) Tj3.36 0 TD 0 Tc (100) Tj15.12 0 TD 0.0034 Tc (-) Tj-163.44 484.56 TD 0.0053 Tc ($ii$) Tj28.8 0 TD /F2 10.08 Tf0.004 Tc 0.0051 Tw (Reference to normal operating or trading activities) TjET170.88 647.52 208.32 0.48 re fBT142.08 629.04 TD/F0 10.08 Tf0.005 Tc 0.558 Tw (Mr Lonergan is of the view that the definition of revenues should provide a) Tj0 -10.08 TD 0.0053 Tc 1.9238 Tw (reasonable basis for distinguishing inflows arising from trading activities) TjT* 0.0056 Tc 2.7875 Tw (from inflows arising from non-trading activities. He believes that this) TjT* 0.0058 Tc 6.6833 Tw (distinction is fundamental to conventional performance assessment) TjT* 0.0053 Tc 1.8972 Tw (techniques, such as relating various "operating costs" to various "inflows) TjT* 0.0054 Tc 2.2117 Tw (from trading activities". Mr Lonergan believes that acceptance of these) TjT* 0.0055 Tc 2.0736 Tw (performance assessment techniques explains why some items reported as) TjT* 0.0056 Tc 0.7235 Tw (revenues are "gross inflows" while others are "inflows net of related costs".) TjT* 0.0046 Tc 2.8409 Tw (He argues that it would be inappropriate to relate "operating costs" to) TjT* 0.0048 Tc 1.2915 Tw (revenues as defined in SAC 4, which could include proceeds arising from) TjT* 0.0051 Tc 0.004 Tw ("non-trading" activities $for example, the sale of a building$.) Tj0 -20.16 TD 0.0051 Tc 0.3967 Tw (Mr Lonergan believes that to report the performance of the entity, revenues,) Tj0 -10.08 TD 0.005 Tc 1.4659 Tw (expenses, gains and losses should be reported separately in the profit and) TjT* 0.0057 Tc 1.7034 Tw (loss or other operating statement. He believes that the definitions of the) TjT* 0.0058 Tc 2.2724 Tw (elements should reflect this distinction, rather than for the matter to be) TjT* 0.0048 Tc 0.2443 Tw (addressed at the display level of the conceptual framework, because defining) TjT* 0.005 Tc 0.3441 Tw (revenues and expenses to include items that may be regarded as "gains" and) TjT* 0.0051 Tc 0.676 Tw ("losses" may encourage the display of revenues and expenses without being) TjT* 0.0058 Tc 0.0033 Tw (structured in a way that assists performance assessment.) Tj0 -20.16 TD 0.0046 Tc 5.0445 Tw (Mr Lonergan notes the view enunciated in paragraph A15 of the) Tj0 -10.08 TD 0.0053 Tc 2.4998 Tw ("Background and Basis for Conclusions" that the SFAC 6 definition of) TjT* 0.0052 Tc 1.6573 Tw (revenues involves arbitrariness in defining ordinary operations. He notes) TjT* 0.0058 Tc 1.6833 Tw (that this arbitrariness may lead to inconsistency of treatment in marginal) TjT* 0.0053 Tc 0.6552 Tw (cases. However, he believes that this does not appear to have been a major) TjT* 0.0053 Tc 0.5439 Tw (practical problem in the United States of America, and nor has the separate) TjT* 0.0045 Tc 1.2446 Tw (reporting of revenues and gains been a major practical problem to date in) TjT* 0.0055 Tc 0.1636 Tw (Australia, and that this limitation is preferable to the defining of revenues in) TjT* 0.0051 Tc 0.004 Tw (SAC 4 to include gains.) Tj0 -30.24 TD /F2 10.08 Tf0.0037 Tc 0.0054 Tw (Matching Principle) TjET142.08 304.8 78.96 0.48 re fBT142.08 286.32 TD/F0 10.08 Tf0.0053 Tc 0.8346 Tw (Mr Lonergan is of the view that SAC 4 places inadequate emphasis on the) Tj0 -10.08 TD 0.0052 Tc 2.6679 Tw (matching principle and relegates what he believes to be a fundamental) TjT* 0.0044 Tc 1.1393 Tw (accounting concept to a status no greater than being supported provided it) TjT* 0.0055 Tc 3.6276 Tw (does not conflict with the definitions and recognition criteria for the) TjT* 0.0062 Tc 4.1309 Tw (elements of financial statements. He believes that this differs from) TjT* 0.0052 Tc 0.0039 Tw (conventional practice and conventional interpretation of financial reports.) Tj0 -20.16 TD 0.0048 Tc 0.9643 Tw (Mr Lonergan believes that SAC 4 should give more explicit recognition to) Tj0 -10.08 TD 0.0059 Tc 0.5269 Tw (the matching principle. He argues that while, in some circ*mstances, there) TjT* 0.0062 Tc 3.1763 Tw (is a fine distinction between "matching" and "income smoothing", the) TjT* 0.0051 Tc 1.348 Tw (framework needs to define matching in the context of accrual accounting,) TjETendstreamendobj199 0 obj<>/ProcSet 241 0 R>>/Rotate 0/Type/Page>>endobj200 0 obj<>streamBT287.04 164.64 TD0 0 0 rg /F0 10.08 Tf0.0034 Tc 0 Tw (-) Tj3.36 0 TD 0 Tc (101) Tj15.12 0 TD 0.0034 Tc (-) Tj-163.44 484.56 TD 0.0058 Tc 0.1325 Tw (which is generally accepted. He believes this is necessary if the concepts are) Tj0 -10.08 TD 0.0056 Tc 0.2435 Tw (to clarify that the financial effects of transactions and other events should be) TjT* 0.0049 Tc 3.0762 Tw (recognised in the reporting periods to which they relate, regardless of) TjT* 0.0051 Tc 0.004 Tw (whether cash is received or paid.) Tj0 -20.16 TD 0.0049 Tc 0.4363 Tw (Mr Lonergan argues that greater emphasis on the matching principle would) Tj0 -10.08 TD 0.005 Tc 0.7641 Tw (avoid many of the problems $outlined above$ which he believes can arise if) TjT* 0.0055 Tc 1.2221 Tw (the definition of liabilities in SAC 4 is applied. For example, he believes) TjT* 0.0049 Tc 3.7642 Tw (that explicit recognition of the matching principle would support the) TjT* 0.0057 Tc 6.4534 Tw (identification of liabilities under the matching principle in those) TjT* 0.0056 Tc 0.1836 Tw (circ*mstances where a present obligation to other entities does not exist. He) TjT* 0.0052 Tc 2.3319 Tw (believes it would also help avoid situations which could otherwise arise) TjT* 0.0057 Tc 0.6234 Tw (where an item meets the definition and criteria for the recognition of assets) TjT* 0.0046 Tc 4.1325 Tw (in SAC 4 but the corresponding $and, for all commercial purposes,) TjT* 0.0052 Tc 2.7239 Tw (matching$ obligation fails $however narrowly$ to meet the definition of) TjT* 0.0062 Tc 0.0029 Tw (liabilities in SAC 4.) TjETendstreamendobj201 0 obj<>endobj202 0 obj<>endobj203 0 obj<>endobj204 0 obj<>endobj205 0 obj<>endobj206 0 obj<>endobj207 0 obj<>endobj208 0 obj<>endobj209 0 obj<>endobj210 0 obj<>endobj211 0 obj<>endobj212 0 obj<>endobj213 0 obj<>endobj214 0 obj<>endobj215 0 obj<>endobj216 0 obj<>endobj217 0 obj<>endobj218 0 obj<>endobj219 0 obj<>endobj220 0 obj<>endobj221 0 obj<>endobj222 0 obj<>endobj223 0 obj<>endobj224 0 obj<>endobj225 0 obj<>endobj226 0 obj<>endobj227 0 obj<>endobj228 0 obj<>endobj229 0 obj<>endobj230 0 obj<>endobj231 0 obj<>stream application/pdf

AASB

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FAQs

How to read a company balance sheet? ›

A balance sheet reflects the company's position by showing what the company owes and what it owns. You can learn this by looking at the different accounts and their values under assets and liabilities. You can also see that the assets and liabilities are further classified into smaller categories of accounts.

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What are the 4 key financial statements? ›

There are four basic types of financial statements used to do this: income statements, balance sheets, statements of cash flow, and statements of owner equity.

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What are the criteria for recognition of a liability? ›

For a liability to qualify for recognition there must be not only a present obligation but also the probability of an outflow of resources embodying economic benefits to settle that obligation.

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What are the two recognition criteria for assets? ›

An asset should be recognised in the statement of financial position when and only when: (a) it is probable that the future economic benefits embodied in the asset will eventuate; and Page 4 - 4 - (b) the asset possesses a cost or other value that can be measured reliably.

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How to read a balance sheet pdf? ›

On the Balance Sheet, Assets are always listed first, followed by Liabilities, and then Shareholder's Equity. In Some financial statements, the Balance Sheet is organized with the Assets on the left side of the page and the Liabilities and Shareholder's Equity on the right side of the page.

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How to check the financials of a company? ›

Financial information can be found on the company's web page in Investor Relations where Securities and Exchange Commission (SEC) and other company reports are often kept.

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What is the most important financial statement? ›

Typically considered the most important of the financial statements, an income statement shows how much money a company made and spent over a specific period of time.

What information is reported in a balance sheet? ›

A balance sheet is a financial statement that reports a company's assets, liabilities, and shareholder equity. The balance sheet is one of the three core financial statements that are used to evaluate a business. It provides a snapshot of a company's finances (what it owns and owes) as of the date of publication.

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What is the format of a balance sheet? ›

Balance Sheet format is prepared either in Horizontal form or Vertical form. In the Horizontal form of the balance sheet format, assets and liabilities are shown side by side and in the vertical form of the balance sheet, assets, and liabilities are shown vertically.

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When should you recognize a liability? ›

There needs to be a present obligation from a past event. There needs to be a reliable estimate, and. There needs to be a probable outflow of resources embodying economic benefits (eg cash)

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What are the three requirements for a liability? ›

The re-examination includes assessing the definition of a liability. The Boards' existing liability definitions include three criteria: (1) a present obligation; (2) a past transaction or event; and (3) a probable future sacrifice of economic benefits.

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What is liability 3 criteria? ›

The criteria are as follows: Harm must be a "reasonably foreseeable" result of the defendant's conduct; A relationship of "proximity" must exist between the defendant and the claimant; It must be "fair, just and reasonable" to impose liability.

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What is the pirate criteria? ›

These criteria are listed under both IFRS and GAPSME, and are commonly referred to as the 'PIRATE' criteria: Probability of generating future economic benefits. Intention to complete the intangible asset. Resources available (technical, financial etc).

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What are the requirements to Recognise an asset? ›

Recognition refers to the process of bringing an asset or liability onto the balance sheet or item of income or expense into the statement of comprehensive income. There are two criteria for the recognition of assets, liabilities, income or expenses: probability and reliability (FRS 102:2.27).

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What are the three criteria for an asset? ›

Assets have three essential characteristics: They embody future economic benefits that involve a capacity, singly or in combination with other assets, to provide goods and services, to provide future cash inflows, or to reduce cash outflows.

How to analyze a balance sheet? ›

The strength of a company's balance sheet can be evaluated by three broad categories of investment-quality measurements: working capital, or short-term liquidity, asset performance, and capitalization structure. Capitalization structure is the amount of debt versus equity that a company has on its balance sheet.

What is a good balance sheet for a company? ›

Strong balance sheets will possess most of the following attributes: intelligent working capital, positive cash flow, a balanced capital structure, and income generating assets.

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How do you know if a company is profitable on a balance sheet? ›

The two most important aspects of profitability are income and expenses. By subtracting expenses from income, you can measure your business's profitability.

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How to read a balance sheet template? ›

with assets listed on the left side and liabilities and equity detailed on the right. Consistent with the equation, the total dollar amount is always the same for each side. In other words, the left and right sides of a balance sheet are always in balance.

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