Bangan, Maria Jenna D.

ACTG218

BSA 2-A-2 Elements of the Financial Statements

How did the definition of assets and liabilities change from the previous version to the new
version?
Based on what I have learned in the video lecture and on the reading material the Sir A given,
the definition of assets and liabilities change or updated. It has new or revised definition or
concept that a student can easily understand. The revised conceptual framework describes how
information should be presented and disclosed in the financial statements. Based on the
written definition of assets and liabilities; assets in previous definition are a resource controlled
by the entity as a result of past events and from which future economic benefits are expected
to flow to the entity. In revised definition it is a present economic resource controlled by the
entity as a result of past events. It is clearly stated that it clarifies that assets are not an inflow
of economic benefits, it is the economic resources controlled by the entity. Previous definition
of liabilities, a present obligation of the entity arising from past events, the settlement of which
is expected to result in an outflow from the entity of the resources embodying economic
benefits. While the new definition is a liability is a present obligation of the entity to transfer an
economic resource as a result of a past events. It is stated that liability is an obligation.
Obligation to transfer economic resource, also the entity does not have an ability to avoid
transfer of resources.