Sbr (int/UK) Strategic Business Reporting

mark) 

 

(Part (b) (i): 4 marks max) 

(ii) 

Conceptual Framework 

Recognition 

The Conceptual Framework states that items should be recognised if they meet 

the definition of an element and if recognition provides useful information to 

the users of financial statements - i.e. relevant information and a faithful 

representation of the entity’s underlying transactions. 

(1 mark) 

The  Conceptual Framework defines an asset as a present economic resource 

controlled by an entity as a result of a past event. The financial asset meets 

this definition because Spamgate is contractually entitled to cash receipts. 

 

  

(1 mark) 

Recognition provides relevant information to financial statement users 

because it informs them about Spamgate’s future cash flows. 

(1 mark) 

The cost and fair value of the asset can be determined and so the element is 

capable of faithfully representation.