Income Definition Conceptual Framework

The exposure draft proposed only minor changes to the definitions to simplify them and align the terminology with that proposed for the definitions of an asset and a liability.

Income definition conceptual framework. The conceptual framework is a summary of the terms and concepts that underlie the preparation and presentation of financial statements. Income is recognised 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. The recognition criteria for income under the conceptual framework are. Information with a very high degree of uncertainty should be replaced by information whose estimation involves less uncertainty as long as explanations are provided.

The conceptual framework is concerned with general purpose financial statements including consolidated financial statements. The existing conceptual framework identifies income and expenses as the elements of financial performance and defines those elements in terms of changes in assets and liabilities. The framework strikes a balance between relevance and faithful representation in order to provide useful information to the users of financial statements.