recognition (accounting) - and measurement

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Recognition is the process of formally recording or incorporating an item into the financial statements of an entity as an asset, liability, revenue, expense or the like. Recognition includes depiction of an item in both words and numbers, with the amount included in the statement totals.

IASB Framework for the Preparation and Presentation of Financial Statements

Recognition is the process of incorporating in the balance sheet or income statement an item that meets the definition of an [financial statement] element and satisfies the criteria for recognition... It involves the depiction of the item in words and by a monetary amount and the inclusion of that amount in the balance sheet or income statement totals.

ASB (UK) Statement of Principles for Financial Reporting

The recognition process requires that all events that may have an effect on elements of the financial statements are, as far as is possible, identified and reflected in an appropriate manner in the financial statements... [The] recognition process has the following stages: (a) initial recognition, which is where an item is depicted in the primary financial statements for the first time; (b) subsequent re-measurement, which involves changing the amount at which an already recognised asset or liability is stated in the primary financial statements; and (c) derecognition, which is where an item that was until then recognised ceases to be recognised.

relation to the accounting thesaurus

Recognition is:

- incorporating (including, reporting) an item in FS [financial statement]

- ie recognizing it [item] as an FSE [financial statement element]

- ie changing its status from just an item into an FSE

Recognition involves:

- measurement

- classification (depiction in words)


recognition constraints (criteria)

constraints for recognition are:  definition (aptness for classification as an fse), measurability, relevance, reliability


recognition process

Once the criteria are met, the process involves:

measurement, and

wording (usually choosing the classification of the item, the heading).


measurement (accounting) - published subject indicator for topic maps

SFAC No 5 

Measurement involves choice of an attribute by which to quantify a recognized item and choice of a scale of measurement...

IASB Framework for the Preparation and Presentation of Financial Statements 

Measurement is the process of determining the monetary amounts at which the elements of the financial statements are to be recognised and carried in the balance sheet and income statement. This involves the selection of the particular basis of measurement.

ASB (UK) Statement of Principles for Financial Reporting 

To recognise an item, it is necessary to attribute a monetary amount to it. This involves two steps: selecting a suitable measurement basis (ie historical cost or current value) for the item and determining an appropriate monetary amount for the basis chosen.


Measurement is:

- assigning a value attribute to an FSE.

- a stage in the process of recognition.


value attributes

SFAC No 5 

Measurement Attributes:  Items currently reported in financial statements are measured by different attributes, depending on the nature of the item and the relevance and reliability of the attribute measured.


Value attributes are: historical cost, current [replacement cost], current market value, net realizable value, and present value. 



Note on PSI pages: The PSI pages are provided temporarily until superseded by higher authority. They were necessary to complete the research  -- and experiment -- being carried out in the web site A subject indicator is defined in the XTM Topic Maps 1.0 Specification as "a resource that is intended by the topic map author to provide a positive, unambiguous indication of the identity of the subject," and a PSI [published subject indicator] is defined as "a subject indicator that is published and maintained at an advertised address for the purpose of facilitating topic map interchange and mergeability [XTM]."

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This page was first published in August 2003; last updated 2015