ACA Corporate Reporting key terms

A set of agreed principles that guides how financial statements are prepared and how new accounting standards are developed, covering objectives, qualitative characteristics, elements and measurement.

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

The threshold at which omitting or misstating an item could influence decisions of users; it is entity-specific and depends on size or nature of the item.

The conditions an item must meet before it appears in the financial statements, typically that it meets an element definition and can be measured reliably with probable future economic benefits.

The removal of a previously recognised asset or liability from the statement of financial position when the entity no longer controls the resource or is no longer obliged.

The power to direct the relevant activities of an investee to affect the returns from it; the basis for consolidation decisions and for recognising many assets.

The process of combining a parent and its subsidiaries into a single set of financial statements as if they were one economic entity, eliminating intragroup balances and transactions.

The equity in a subsidiary not attributable, directly or indirectly, to the parent; presented separately within consolidated equity and adjusted for the subsidiary's results.

The future economic benefits arising from assets that are not individually identified and separately recognised in a business combination; measured as consideration transferred plus NCI less net identifiable assets acquired.

A transaction in which an acquirer obtains control of one or more businesses; accounted for using the acquisition method at fair value of consideration and identifiable net assets.

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 reduction in the recoverable amount of an asset below its carrying amount, recognised as an expense; for goodwill it is never reversed once recognised.

The higher of an asset's fair value less costs of disposal and its value in use; compared with carrying amount to determine whether an impairment loss is required.

The present value of lease payments not yet paid, measured using the interest rate implicit in the lease or the lessee's incremental borrowing rate, and increased by interest and reduced by payments.

The lessee's asset representing its right to use a leased item over the lease term, measured initially at the lease liability plus initial direct costs and prepayments, less incentives received.

The rate of interest a lessee would have to pay to borrow over a similar term, with similar security, the funds needed to obtain an asset of similar value.

The process of recognising revenue when a promised good or service is transferred to the customer, in an amount reflecting the consideration the entity expects to be entitled to.

A promise in a contract with a customer to transfer a distinct good or service; revenue is recognised when each obligation is satisfied, at a point in time or over time.

An obligation to transfer goods or services to a customer for which consideration has been received or is due; commonly described as deferred or unearned revenue.

Any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity, classified by contractual cash flow characteristics and business model.

A probability-weighted estimate of credit losses over the expected life of a financial asset, recognised regardless of whether a loss event has occurred.

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.

A 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 creates deferred tax.

The amount attributed to an asset or liability for tax purposes, used to compare with the accounting carrying amount when measuring deferred tax.

Liabilities of uncertain timing or amount, recognised when a present obligation exists from a past event, an outflow is probable and a reliable estimate can be made.

A possible obligation whose existence will be confirmed only by uncertain future events, or a present obligation that cannot be measured reliably; disclosed rather than recognised.

Events occurring between the end of the reporting period and the date the financial statements are authorised for issue, split into adjusting and non-adjusting events.

The assumption that an entity will continue in operation for the foreseeable future, without intention or necessity to liquidate or curtail operations significantly.

An omission or misstatement in prior financial statements arising from failure to use, or misuse of, reliable information available when those statements were issued; corrected retrospectively.

Correcting the opening balance of each affected component of equity and comparative amounts as if the error had never occurred or the new policy had always applied.

A primary statement classifying cash movements into operating, investing and financing activities, reconciling opening and closing cash and cash equivalents.

Short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value, typically with maturities of three months or less.

The principal revenue-producing activities of the entity and other activities that are not investing or financing; cash flows may be presented using the direct or indirect method.

Disclosure of revenue, profit or loss, assets and liabilities for each operating segment, identified on the basis of internal reports reviewed by the chief operating decision maker.

A component of an entity that engages in business activities, whose results are regularly reviewed by the chief operating decision maker, and for which discrete financial information is available.

Information about transactions and outstanding balances with parties that control, are controlled by, or have significant influence over the entity, including key management personnel compensation.

Profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding, with a diluted figure reflecting potential ordinary shares.

The number of ordinary shares outstanding during a period, weighted by the time they were outstanding, adjusted for bonus issues and share splits applied retrospectively.

The reduction in earnings per share that would occur if potential ordinary shares such as options or convertibles were exercised or converted, assuming maximum dilutive effect.