scroll to top
Stuck on your essay?
Get ideas from this essay and see how your work stacks up
Word Count: 774
Chapter 4 Recognition in financial statementsHaving defined the elements of financial statements in Chapter 3 the Statement of Principles turns next to their recognition Whilst only items that meet those definitions should be recognised not every item that does so should necessarily be recognised Recognition is very important Creative accounting often means recognising as an asset something which is not an assetRecognition involves depiction of the element both in words and by a monetary amount and the inclusion of that amount in the statement totals Notes to the financial statements contain important information both about elements that are recognised and about those that are not Disclosure in a note however cannot be a proper substitute for a failure to recognise elements that meet the condition for recognitionThe recognition of assets and liabilities falls into three stages1initial recognition ie incorporation of an item into financial statements for the first time2subsequent remeasurement ie changing the monetary amount at which a previously recognised item is recorded 3and derecognition ie removal from the financial statements of a previously recognised item An element should be recognised if there is sufficient evidence that the change in assets or liabilities inherent in the element has occurred including where appropriate evidence that a future inflow or outflow of benefit will occur and it can be measured at a monetary amount with sufficient reliability A change in the amount at which an asset or liability is recorded should be recognised if there is sufficient evidence that the amount of an asset or liability has changed and the new amount of the asset or liability can be measured with sufficient reliability An asset or liability should cease to be recognised if there is no longer sufficient evidence that the entity has access to future economic benefits or an obligation to transfer economic benefits including where appropriate evidence that a future inflow or outflow of benefit will occur At any stage in the recognition process where
@Kibin is a lifesaver for my essay right now!!
- Sandra Slivka, student @ UC Berkeley
Wow, this is the best essay help I've ever received!
- Camvu Pham, student @ U of M
If I'd known about @Kibin in college, I would have gotten much more sleep
- Jen Soust, alumni @ UCLA