Which of the following statements is INCORRECT in relation to the recognition criteria for elements of the financial statements?
A) Assets are recognised when it is probable that future economic benefits will flow to the entity and the asset has a cost or value that can be measured reliably.
B) Because equity is the arithmetic difference between assets and liabilities, a separate recognition criteria for equity is not needed in The Framework.
C) Liabilities are recognised when it is probable that an outflow of resources embodying economic benefits will result from the settlement of a present obligation and the amount at which settlement will take place can be measured reliably.
D) Income is recognised when an increase in future economic benefits related to a decrease in an asset or an increase in a liability that has arisen can be measured reliably.

Question

Quizplus · Accepted Answer

Income is recognised when it results in an increase in assets or a decrease in liabilities that can be measured reliably, leading to an increase in equity, not related to contributions from equity participants. The incorrect statement (D) misrepresents this by suggesting income is related to a decrease in an asset or an increase in a liability, which is not accurate.

Which of the Following Statements Is INCORRECT in Relation to the Recognition