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Two new Australian Accounting Alerts

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14 Jul 2004

Deloitte (Australia) has published two Australian Accounting Alerts: (PDF 64k) Pending AASB 124 'Related Party Disclosures' (PDF 73k) The AASB issues Pending Framework for the Preparation and Presentation of Financial Statements .

Deloitte (Australia) has published two Australian Accounting Alerts:

One of the main differences between the Pending Framework and existing Australian accounting pronouncements is that the Pending Framework contains a different notion of income and revenue from that contained in SAC 4.... SAC 4 defines revenue as 'inflows or other enhancements, or savings in outflows, of future economic benefits in the form of increases in assets or reductions in liabilities of the entity'. The equivalent concept in the Pending Framework is income. This is defined as 'both revenue and gains'.

'Revenue' is defined as arising in the course of the ordinary activities of an entity, and 'gains' are determined on a net basis and represent other items that meet the definition of income and 'may, or may not, arise in the course of the ordinary activities of an entity'.

As a result of this change, the current requirement to report proceeds on the sale of assets will no longer form part of revenue, rather the net gain or loss will be appropriately classified. The broad impact of the definition of income as 'revenue and gains' means that some items will be reported on a net basis and others will be reported on a gross basis.

A similar issue arises in respect of expenses, which are defined to encompass both 'losses as well as those expenses that arise in the course of the ordinary activities of the entity'.

Correction list for hyphenation

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