Component 4 : Element of Financial position

• Asset

  A present economic resources controlled by the entity as a result of past events
• Economic resources

  • A right that has the potential to produce economic benefits
  • Control links an economic resource to an entity
  • Assessing whether control exists helps to identify the economic resource for which the entity accounts
• Liability


  A present obligation of the entity to transfer an economic resources as a result of past event
• Criteria for a liability to exist

  • The entity has an obligation
  • The obligation is to transfer an economic resource
  • The obligation is a present obligation that exists as a result of past events
• Obligation


  A duty or responsibility that an entity has no practical ability to avoid
• Present obligation

  • The entity has already obtained economic benefits or taken an action
  • As a consequence, the entity will or may have to transfer an economic resource that it would not otherwise have had to transfer
• Equity


  The residual interest in the asset of the entity after deducting all its liabilities
• Equity claims

  • Shares of various types, issued by the entity
  • Some obligations of the entity to issue another equity claim
• Income


  Increases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims
• Expenses

  Decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims