matching of costs with revenues – A process in which expenses are recognized in the income statement [statement of comprehensive income] on the basis of a direct association between the costs incurred and the earning of specific items of income. This process involves the simultaneous or combined recognition of revenues and expenses that result directly and jointly from the same transactions or other events. However, the application of the matching concept does not allow the recognition of items in the balance sheet [statement of financial position] which do not meet the definition of assets or liabilities. [F.95]


material – Omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions that users make on the basis of the financial statements. Materiality depends on the size and nature of the omission or misstatement judged in the surrounding circumstances. The size or nature of the item, or a combination of both, could be the determining factor. [IAS 1.7, IAS 8.5]

materiality – Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements. [F.30]

measurement – The process of determining the monetary amounts at which the elements of the financial statements are to be recognized and carried in the balance sheet [statement of financial position] and income statement [statement of comprehensive income].[F.99]

measurement date – The date at which the fair value of the equity instruments granted is measured for the purposes of IFRS 2. For transactions with employees and others providing similar services, the measurement date is grant date. For transactions with parties other than employees (and those providing similar services), the measurement date is the date the entity obtains the goods or the counterparty renders service. [IFRS 2.A]

minimum lease payments – The payments over the lease term that the lessee is or can be required to make, excluding contingent rent, costs for services and taxes to be paid by and reimbursed to the lessor, together with:
(a) for a lessee, any amounts guaranteed by the lessee or by a party related to the lessee; or
(b) for a lessor, any residual value guaranteed to the lessor by: (i) the lessee; (ii) a party related to the lessee; or (iii) a third party unrelated to the lessor that is financially capable of discharging the obligations under the guarantee. [IAS 17.4]

minority interest – See ‘non-controlling interest’ monetary assets Money held and assets to be received in fixed or determinable amounts of money. [IAS 38.8]

monetary items – Units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency. [IAS 21.8]

monetary items – Money held and items to be received or paid in money. [IAS 29.12]

multi-employer (benefit) plans – Defined contribution plans (other than state plans) or defined benefit plans (other than state plans) that:
(a) pool the assets contributed by various entities that are not under common control; and
(b) use those assets to provide benefits to employees of more than one entity, on the basis that contribution and benefit levels are determined without regard to the identity of the entity that employs the employees concerned. [IAS 19.7]

mutual entity – An entity, other than an investor-owned entity, that provides dividends, lower costs or other economic benefits directly to its owners, members or participants. For example, a mutual insurance company, a credit union and a co-operative entity are all mutual entities. [IFRS 3.A]

net assets available for benefits – The assets of a plan less liabilities other than the actuarial present value of promised retirement benefits. [IAS 26.8]

net investment in a foreign operation – The amount of the reporting entity’s interest in the net assets of that operation. [IAS 21.8]

net investment in the lease – The gross investment in the lease discounted at the interest rate implicit in the lease. [IAS 17.4]

net realizable value – The estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Net realizable value refers to the net amount that an entity expects to realize from the sale of inventory in the ordinary course of business. Fair value reflects the amount for which the same inventory could be exchanged between knowledgeable and willing buyers and sellers in the marketplace. The former is an entity-specific value; the latter is not. Net realizable value for inventories may not equal fair value less costs to sell. [IAS 2.6–7]

neutrality – Freedom from bias of the information contained in financial statements. [F.36]

non-adjusting events after the reporting period – See ‘events after the reporting period’

non-cancellable lease – A lease that is cancellable only:
(a) upon the occurrence of some remote contingency;
(b) with the permission of the lessor;
(c) if the lessee enters into a new lease for the same or an equivalent asset with the same lessor; or
(d) upon payment by the lessee of such an additional amount that, at inception of the lease, continuation of the lease is reasonably certain.
[IAS 17.4]

non-controlling interest – The equity in a subsidiary not attributable, directly
or indirectly, to a parent [IAS 27.4, IFRS 3.A]

non-current asset – An asset that does not meet the definition of a current asset. [IFRS 5.A]

normal capacity of production facilities – The production expected to be achieved on average over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. [IAS 2.13]

notes – Notes contain information in addition to that presented in the statement of financial position, statement of comprehensive income, separate income statement (if presented), statement of changes in equity and statement of cash flows. Notes provide narrative descriptions or dis-aggregations of items presented in those statements and information about items that do not qualify for recognition in those statements. [IAS 1.7]

obligating event – An event that creates a legal or constructive obligation that results in an entity having no realistic alternative to settling that obligation. [IAS 37.10]

obligation – A duty or responsibility to act or perform in a certain way. Obligations may be legally enforceable as a consequence of a binding contract or statutory requirement. Obligations also arise, however, from normal business practice, custom and a desire to maintain good business relations or act in an equitable manner. [F.60]

offsetting – See ‘set-off, legal right of’ onerous contract A contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. [IAS 37.10]

opening IFRS statement of financial position – An entity’s statement of financial position at the date of transition to IFRSs. [IFRS 1.A]

operating activities – The principal revenue-producing activities of an entity and other activities that are not investing or financing activities. [IAS 7.6, IAS 14.8]

operating cycle – The time between the acquisition of assets for processing and their realization in cash or cash equivalents. [IAS 1.68].

operating lease – A lease other than a finance lease. [IAS 17.4]

operating segment – An operating segment is a component of an entity:
(a) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity);
(b) whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and
(c) for which discrete financial information is available.
[IFRS 8]

options, warrants and their equivalentsFinancial instruments that give the holder the right to purchase ordinary shares. [IAS 33.5]

ordinary equity holders – Holders of ordinary shares. [IAS 33.5–9]

ordinary share – An equity instrument that is subordinate to all other classes of equity instruments. [IAS 33.5]

originated loans and receivables – [See ‘loans and receivables’ other comprehensive
income] Items of income and expense (including reclassification adjustments) that are not recognized in profit or loss as required or permitted by other IFRSs. [IAS 1.7]

other long-term employee benefits – Employee benefits (other than post-employment benefits and termination benefits) which do not fall due wholly within twelve months after the end of the period in which the employees render the related service. [IAS 19.7]

other price risk – The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. [IFRS 7.A]

owner-occupied property – Property held (by the owner or by the lessee under a finance lease) for use in the production or supply of goods or services or for administrative purposes. [IAS 40.5]

owners – Holders of instruments classified as equity. [IAS 1.7]

owners – In IFRS 3 owners is used broadly to include holders of equity interests of investor-owned entities and owners or members of, or participants in, mutual entities. [IFRS 3.A]

parent – An entity that has one or more subsidiaries. [IAS 27.4, IFRS 3.A]

participants – The members of a retirement benefit plan and others who are entitled to benefits under the plan. [IAS 26.8]

past due – A financial asset is past due when a counterparty has failed to make a payment when contractually due. [IFRS 7.A]

past service cost – The increase in the present value of the defined benefit obligation for employee service in prior periods, resulting in the current period from the introduction of, or changes to, post-employment benefits or other long-term employee benefits. Past service cost may be either positive (where benefits are introduced or improved) or negative (where existing benefits are reduced). [IAS 19.7]

percentage of completion method – The recognition of revenue and expenses by reference to the stage of completion of a contract. Under this method contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed. [IAS 11.25]

performance – The relationship of the income and expenses of an entity, as reported in the income statement [statement of comprehensive income]. [F.47]

plan assets (of an employee benefit plan):
(a) Assets held by a long-term employee benefit fund; and
(b) qualifying insurance policies.
[IAS 19.7]

policyholder – A party that has a right to compensation under an insurance contract if an insured event occurs. [IFRS 4.A]

post-employment benefits – Employee benefits (other than termination benefits) which are payable after the completion of employment. [IAS 19.7]

post-employment benefit plans – Formal or informal arrangements under which an entity provides post-employment benefits for one or more employees. [IAS 19.7]

potential ordinary share – A financial instrument or other contract that may entitle its holder to ordinary shares. [IAS 33.5].

presentation currency – The currency in which the financial statements are presented. [IAS 21.8]

present value – A current estimate of the present discounted value of the future net cash flows in the normal course of business. [F.100(d)]

present value of a defined benefit obligation – See ‘defined benefit obligation (present value of)’ [IAS 19.7]