Relevance – FAQ | IFRS

Relevance

Consider relevancy and irrelevancy

5.12 Information about assets, liabilities, equity, income and expenses is relevant to users of financial statements. However, recognition of a particular asset or liability and any resulting income, expenses or changes in equity may not always provide relevant information. That may be the case if, for example:

  1. it is uncertain whether an asset or liability exists (see Existence uncertainty 5.14); or
  2. an asset or liability exists, but the probability of an inflow or outflow of economic benefits is low (see Low probability of an inflow or outflow of economic benefits 5.15–5.17).

Other factors may complete relevancy

5.13 The presence of one or both of the factors described in Consider relevancy and irrelevancy 5.12 does not lead automatically to a conclusion that the information provided by recognition lacks relevance. Moreover, factors other than those described in Consider relevancy and irrelevancy 5.12 may also affect the conclusion. It may be a combination of factors and not any single factor that determines whether recognition provides relevant information.

Existence uncertainty

5.14 First section in 8. Uncertainty as to do rights exists? in Rights with potential to produce economic benefits 4.13 and 7. Uncertainty as to does an obligation exist? in Obligation 4.35 discuss cases in which it is uncertain whether an asset or liability exists. In some cases, that uncertainty, possibly combined with a low probability of inflows or outflows of economic benefits and an exceptionally wide range of possible outcomes, may mean that the recognition of an asset or liability, necessarily measured at a single amount, would not provide relevant information. Whether or not the asset or liability is recognised, explanatory information about the uncertainties associated with it may need to be provided in the financial statements.

Consider relevancy and irrelevancy

The presence of one or both of the factors described in Consider relevancy and irrelevancy 5.12 does not lead automatically to a conclusion that the information provided by recognition lacks

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