ACCA Strategic Professional · Strategic Business Reporting (International) · The applications, strengths and weaknesses of the accounting framework
Under the IASB Conceptual Framework for Financial Reporting (2018), which of the following is the definition of an asset?
An asset is a present economic resource controlled by the entity as a result of past events. Control, not legal ownership, is what matters, and the resource must have the potential to produce economic benefits. The obligation-based wording describes a liability instead.
- AA present economic resource controlled by the entity as a result of past eventsCorrect
- BA resource owned by the entity that is expected to generate cash inflows within one year
- CA present obligation of the entity to transfer an economic resource as a result of past events
- DA right to receive cash that has been recognised at historical cost
Explanation
The 2018 Conceptual Framework defines an asset as a present economic resource controlled by the entity as a result of past events. Ownership is not required, and no one-year limit applies. The option describing a present obligation is the definition of a liability, not an asset.
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