Set of rights – Annual Reporting

Asset definition

30/06/2021 by 75385885

Asset definition

There are two asset definitions in current IFRS Standards, in IAS 38 Intangible assets and in the Conceptual Framework for Financial Reporting. The wording deviated but the meaning is exactly the same, here they are:

IAS 38 Intangible assets

The asset definition as per IAS 38 Intangible assets is as follows – an asset is 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.

Before providing examples of assets, let’s analyse the asset definition.

Analysis of the asset definition

Rights with potential to produce economic benefits

18/02/202011/02/2019 by 75385885

Introduction – set the stage Rights with potential to produce economic benefits – This is all about: An economic resource is a right that has the potential to produce economic benefits. Many assets, for example, receivables and property, are associated with legal rights, including the right of ownership. In determining the existence of an asset, the right of ownership is not essential; thus, for example, property held on a lease is an asset if the reporting entity controls the benefits which are expected to flow from the property. This emphasises that the resource in question is not, for example, a physical object (such as an item of property, plant and equipment), but a right (or set of rights) over that … Read more

Unit of account

15/02/202011/02/2019 by 75385885

The ‘Unit of account’ definition is used for both assets and liabilities in (un)grouping transactions for financial reporting purposes and is primarily used as a term to which recognition and measurement requirements are applied. Explanatory example: A lessee has leased an entire office building with five floors and accounted for that lease as a single separate lease component. Partway through the lease term, the lessee commits to a plan to sublease one of the five floors. In other words, the lessee will sublease a portion of what it has previously accounted for as a single unit of account. The following table features several examples of how to determine the “identified asset” in arrangements where the unit of account is unclear … Read more