The first step in the accounting for any transaction, event or circumstance is identifying the accounting element:
This page explains and interprets how the IASB and FASB conceptual frameworks (CF and CON respectively) define terms like asset, liability or revenue.
Why is this necessary?
For example, the Oxford dictionary defines an asset "as a thing of value, especially property, that a person or company owns, and that can be used or sold to pay debts."
In contrast, the IFRS conceptual framework defines an asset as "a present economic resource controlled by the entity as a result of past events. An economic resource is a right that has the potential to produce economic benefits."
Similar, but different (in some important ways).
To accomplish its task, this page cites and includes quotations from the conceptual frameworks published by the IASB (CF) and FASB (CON). Where pertinent, it quotes and compares both conceptual frameworks. Otherwise, it quotes whichever framework provides the more pertinent guidance.
These quotations are intentionally kept as short as possible and/or edited, so as to constitute fair use as this term is understood under section 107 of the Copyright Act 1976.
Readers of this page are strongly advised to consult the full text of each framework.
It is free to download on the IASB web site and FASB web site.
- Assets
- Liabilities
- Equity
- Revenue
- Expenses
- Gains
- Losses
- Investments by owners
- Distributions to owners
- Comprehensive income