BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A resource owned by an entity as a result of past events and from which future economic benefits are expected to flow to the entity
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A resource over which an entity has legal rights as a result of past events and from which economic benefits are expected to flow to the entity
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A resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity
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A resource to which an entity has a future commitment as a result of past events and from which future economic benefits are expected to flow from the entity
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Detailed explanation-1: -Based on these general criteria: An asset is recognised in the balance sheet when it is probable that the future economic benefits will flow to the entity and the asset has a cost or value that can be measured reliably.
Detailed explanation-2: -The Conceptual Framework states that only items that meet the definition of an asset, a liability or equity are recognised in the statement of financial position and only items that meet the definition of income or expenses are to be recognised in the statement(s) of financial performance.
Detailed explanation-3: -(b) A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.
Detailed explanation-4: -1 The IASB has tentatively decided to define a liability as: A present obligation of the entity to transfer an economic resource as a result of past events.
Detailed explanation-5: -“Assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events.”