AccountingBusiness

What is Equity ? Why the Conceptual Framework does not prescribe any recognition criteria for equity.

What is  Equity :

The C0ncptual Framework defines equity as ‘the residual interest in the assets of the entity after deducting all its liabilities’. Equity cannot be identified independently of the other elements in the statement of financial position/balance sheet.

 The characteristics of equity are that equity is a residual, i.e. something left over after the entity has determined its assets and liabilities. In other words:

Equity = Assets –Liabilities.

There is no need for recognition criteria for equity as it is a residual, determined after recognition criteria are applied to the other elements.

Tags
Show More

Related Articles

Back to top button
Close
Close

Adblock Detected

Please consider supporting us by disabling your ad blocker