CA ANZ Core 3: FAR key terms

The set of underlying concepts that guides the setting of accounting standards, covering the objective of general purpose financial reporting, qualitative characteristics, elements of financial statements, recognition and derecognition, measurement, presentation and disclosure.

The attributes that make financial information useful: relevance and faithful representation as fundamental characteristics, supported by comparability, verifiability, timeliness and understandability as enhancing characteristics.

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users make from the financial statements, judged in the context of the entity's specific circumstances.

An entity that is required, or chooses, to prepare general purpose financial statements, identified by whether its financial statements are relied upon by users who cannot demand information tailored to their needs.

Financial statements intended to meet the needs of users who are unable to require reports tailored to their specific information needs, prepared under a reporting framework such as Australian Accounting Standards.

The assumption that an entity will continue in operation for the foreseeable future, so it has neither the intention nor the need to liquidate or curtail materially the scale of its operations.

Accounting that recognises transactions and events when they occur, recording them in the periods to which they relate, rather than only when cash is received or paid.

A statement presenting an entity's assets, liabilities and equity at a point in time, classified between current and non-current items where required.

A statement reporting an entity's financial performance for a period, showing profit or loss and separately items of other comprehensive income such as remeasurements and translation differences.

A statement explaining movements in cash and cash equivalents during a period, classified into operating, investing and financing activities.

Items of income and expense that are not recognised in profit or loss as required or permitted by other standards, such as revaluation surpluses and foreign currency translation differences.

The presentation of assets and liabilities, or income and expenses, net of one another. It is permitted only where a standard requires or permits it, because offsetting reduces understandability.

A promise in a contract with a customer to transfer to the customer either a distinct good or service, or a series of distinct goods or services that are substantially the same.

The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services, adjusted for variable consideration, significant financing and non-cash consideration.

Consideration in a contract that may change due to discounts, rebates, refunds, credits, incentives or penalties. It is estimated and included in the transaction price to the extent highly probable not to reverse significantly.

The process of identifying the contract with a customer, identifying performance obligations, determining the transaction price, allocating it, and recognising revenue when each obligation is satisfied.

An entity's right to consideration in exchange for goods or services transferred, where that right is conditional on something other than the passage of time.

An entity's obligation to transfer goods or services to a customer for which the entity has received consideration, or for which consideration is due, from the customer.

A measurement approach under which an item of property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses.

A measurement approach under which an item of property, plant and equipment is carried at a revalued amount, being fair value at the revaluation date less subsequent depreciation and impairment.

The systematic allocation of the depreciable amount of an asset over its useful life, reflecting consumption of the asset's future economic benefits.

The period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected from the asset.

The estimated amount an entity would currently obtain from disposing of an asset, after deducting estimated disposal costs, if the asset were already of the age and condition expected at the end of its useful life.

The amount by which the carrying amount of an asset exceeds its recoverable amount, recognised immediately in profit or loss unless another standard requires otherwise.

The higher of an asset's fair value less costs of disposal and its value in use, used to test whether an asset's carrying amount is impaired.

The present value of the future cash flows expected to be derived from an asset or cash-generating unit, including terminal value, discounted at a pre-tax rate reflecting current market assessments of risk.

The smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or groups of assets, used for impairment testing.

An asset representing a lessee's right to use an underlying asset for the lease term, measured initially at the lease liability plus initial direct costs and related adjustments.

The present value of lease payments not paid at the commencement date, discounted using the interest rate implicit in the lease or the lessee's incremental borrowing rate.

The non-cancellable period of a lease, together with periods covered by an option to extend the lease if exercise is reasonably certain, and periods covered by a termination option if not reasonably certain to be exercised.

A lease that, at the commencement date, has a lease term of twelve months or less and does not include an option to purchase the underlying asset.

A measurement of a financial asset or liability at initial recognition amount, adjusted for principal repayments and cumulative amortisation using the effective interest method, less impairment.

A method of calculating the amortised cost of a financial instrument and allocating interest income or expense over the relevant period, using the rate that discounts expected cash flows to the carrying amount.

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A liability of uncertain timing or amount, recognised when a present obligation exists from a past event, an outflow is probable and the amount can be reliably estimated.

A possible obligation whose existence will be confirmed only by uncertain future events, or a present obligation that is not recognised because outflow is not probable or cannot be measured reliably.

An existing duty of an entity arising from a past event, which may be legal or constructive, and which the entity has little or no realistic alternative but to settle.

The present value of expected future payments required to settle employee service in the current and prior periods, measured using actuarial assumptions and discounted to present value.

An asset representing future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognised, measured as the excess of consideration over net identifiable assets.

The equity in a subsidiary not attributable, directly or indirectly, to a parent, presented within consolidated equity separately from the parent owners' equity.

The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, typically presumed when an investor holds more than half the voting rights.

The tax effect of temporary differences between the carrying amount of an asset or liability and its tax base, recognised as a deferred tax asset or liability.

The amount attributed to an asset or liability for tax purposes, used to determine temporary differences that give rise to deferred tax.

The difference between the carrying amount of an asset or liability in the statement of financial position and its tax base, which reverses over time and generates deferred tax.

The currency of the primary economic environment in which an entity operates, used to measure and record its transactions before translation into a presentation currency.

The difference resulting from translating a given number of units of one currency into another currency at different exchange rates, recognised in profit or loss or other comprehensive income depending on the item.

The calculation and interpretation of relationships between financial statement items, such as liquidity, profitability, efficiency and gearing ratios, to assess performance and financial position.

A technique comparing financial statement amounts across several periods, often expressed as index numbers relative to a base year, to identify direction and consistency of performance.

A technique expressing each line in a financial statement as a percentage of a common base, such as total assets or revenue, to compare entities of different sizes or periods.