Conceptual Framework for Financial Reporting

Definitions of income and expenses
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 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.
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 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.
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).
4.68
4.69
4.70
4.71
4.72
Conceptual Framework
A50
© IFRS Foundation

---

C
ONTENTS
from paragraph
CHAPTER 5—RECOGNITION AND DERECOGNITION
THE RECOGNITION PROCESS
5.1
RECOGNITION CRITERIA
5.6
Relevance
5.12
Existence uncertainty
5.14
Low probability of an inflow or outflow of economic benefits
5.15
Faithful representation