IFRS for SMEs / Third edition changes / Section 2 in the third edition: concepts and pervasive principles
Section 2 in the third edition: concepts and pervasive principles
Section 2 is revised to bring it into line with the IASB's 2018 Conceptual Framework. The concepts underpin every other section, so the change matters most when no section addresses a transaction and the entity has to develop its own policy.
What changes
- Section 2 Revised definitions of an asset and a liability, built on the idea of an economic resource and a present obligation.
- Section 2 Updated concepts for recognition, measurement and derecognition, aligned with the 2018 Conceptual Framework.
What to prepare
- Review any accounting policy the company developed itself under Section 10 because no section applied, and confirm it still meets the revised definitions.
How Sight handles it
Sight classifies accounts using the element definitions; the change does not alter how existing accounts are presented.
Section 2: Concepts and Pervasive Principles: the section in full.
Other third-edition changes
- Section 3 in the third edition: material accounting policy information
- Section 4 in the third edition: disaggregating line items
- Section 6 in the third edition: dividends declared after year end
- Section 7 in the third edition: financing liabilities and supplier finance
- Section 8 in the third edition: material policies and judgements
- Section 11 in the third edition: one section for financial instruments, ageing and maturity
- Section 12 in the third edition: the new fair value section
- Section 19 in the third edition: business combinations
- Section 23 in the third edition: the five-step revenue model
- Section 29 in the third edition: uncertain tax treatments
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