IFRS For Dummies

Appendix C

Glossary

accrual: An amount recognised in the financial statements in respect of goods or services received at (or before) the reporting date but for which a bill hasn’t been received.

aggregate: The total (the sum of).

amortisation: The method of writing off the cost of an intangible non-current asset over its estimated useful life (the equivalent of depreciation for tangible non-current assets).

asset: Something that a business owns. An asset can be non-current or current.

average cost: The cost of a company’s inventory based on the average cost of the goods available for sale during the accounting period.

carrying value: The amount at which an item is shown in the financial statements.

capital: Cash or goods used in a business to generate income.

capitalise: To include an item within non-current assets on the statement of financial position.

contingent consideration arrangements: An arrangement whereby the buyer pays a lump sum to the seller of a business at the time of the buyer’s acquisition with a promise to pay more (contingent consideration) if the seller meets certain criteria within a specified time period.

current asset: An asset held in a company’s statement of financial position that the company expects to turn into cash within 12 months.

depreciated historic cost model: Measures non-current assets in the statement of financial position at cost, which you then write off by way of depreciation over the asset’s estimated useful life.

depreciation: The ...