What are the Recognition Criteria for Income under the Conceptual Framework?

Recognition Criteria for Income under the Conceptual Framework

The recognition criteria for income under the Conceptual Framework are:

“Income is recognized in the income statement when an increase in future economic benefits related to an increase in an asset or a decrease of a liability has arisen that can be measured reliably.

This means, in effect, that recognition of income occurs simultaneously with the recognition of increases in assets or decreases in liabilities.”

This means that once an asset is recognized or a liability reduced or De-recognized, under the Conceptual Framework’s asset/liability model, income is recognized simultaneously.

The key purpose stated in IAS 18 is to identify when revenue should be recognized. IAS 18 (Objective paragraph) states that:

“Revenue is recognized when it is probable that future economic benefits will flow to the entity and these benefits can be measured reliably.”

IAS 18 then specifies the circumstances in which the recognition criteria for income will be met.

Show More

Related Articles

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker