The Framework's recognition criteria provides that 'an asset is recognised in the balance sheet when it is ________ that the future economic benefits will flow to the entity and the asset has a cost or value that can be measured __________'.
A) possible; reliably
B) probable; accurately
C) probable; reliably
D) certain; accurately

Question

Quizplus · Accepted Answer

The correct recognition criteria is that an asset is recognised in the balance sheet when it is probable that the future economic benefits will flow to the entity and the asset has a cost or value that can be measured reliably. Option A is incorrect as it states 'possible' which is not adequate enough to recognise an asset. Option B is incorrect as it states 'accurately' which is not necessarily a requirement, but rather the asset value needs to be measured 'reliably'. Option D is incorrect as it states 'certain' which is too strong of a requirement to recognise an asset.

The Framework's Recognition Criteria Provides That 'An Asset Is Recognised