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

Under the IASB Conceptual Framework (2018), which of the following best describes an asset?

An asset is a present economic resource controlled by the entity as a result of past events. The resource is a right that has the potential to produce economic benefits. Ownership and certainty of inflow are not required, and the obligation wording describes a liability instead.

  1. AA present economic resource controlled by the entity as a result of past eventsCorrect
  2. BA past economic resource owned by the entity that is expected to generate profit
  3. CA present obligation of the entity to transfer an economic resource as a result of past events
  4. DA resource whose future economic benefits are virtually certain to flow to the entity

Explanation

The 2018 Conceptual Framework defines an asset as a present economic resource controlled by the entity as a result of past events. An economic resource is a right with the potential to produce economic benefits. Option C is the definition of a liability, and certainty of inflow is not required.

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