Definitions Of Income And Expenses – FAQ | IFRS

Definitions of income and expenses

Income – Core definition

4.68 Income is 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 – Core definition

4.69 Expenses are decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims.

Contributions – No income and Distributions – No expenses

4.70 It follows from these definitions of income and expenses that contributions from holders of equity claims are not income, and distributions to holders of equity claims are not expenses.

Income and expense relate to performance

4.71 Income and expenses are the elements of financial statements that relate to an entity’s financial performance. Users of financial statements need information about both an entity’s financial position and its financial performance. Hence, although income and expenses are defined in terms of changes in assets and liabilities, information about income and expenses is just as important as information about assets and liabilities.

Separate income and expense based on characteristics Definitions of income and expenses

4.72 Different transactions and other events generate income and expenses with different characteristics. Providing information separately about income and expenses with different characteristics can help users of financial statements to understand the entity’s financial performance (see paragraphs 7.14–7.19 in Profit or Loss and Other Comprehensive Income).

4.72 Different transactions and other events generate income and expenses with different characteristics. Providing information separately about income and expenses with different characteristics can help users of financial statements to understand the entity’s financial performance (see paragraphs 7.14–7.19 in Profit or Loss and Other Comprehensive Income). 4.72 Different transactions and other events generate income and expenses with different characteristics. Providing information separately about income and expenses with different characteristics can help users of financial statements to understand the entity’s financial performance (see paragraphs 7.14–7.19 in Profit or Loss and Other Comprehensive Income).

General model of measurement of insurance contracts

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