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ACCA Strategic Professional · Strategic Business Reporting (International) · The applications, strengths and weaknesses of the accounting framework

Under the 2018 Conceptual Framework, which statement about control of an economic resource is correct?

An entity controls an economic resource when it has the present ability to direct its use and obtain the economic benefits that may flow from it. Legal ownership, certainty of inflows or purchase in an exchange are not required by the Conceptual Framework.

  1. AAn entity controls a resource if it has the present ability to direct its use and obtain the economic benefits that may flow from itCorrect
  2. BAn entity controls a resource only if it holds legal title to it
  3. CAn entity controls a resource only if it is certain that economic benefits will flow from it
  4. DAn entity controls a resource only if it was purchased in an exchange transaction

Explanation

Control links the resource to the entity through the present ability to direct its use and obtain the benefits. Legal title is not required, certainty of inflow is not needed because potential is sufficient, and the resource need not have been acquired by purchase.

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