Glossary of Defined Terms

This Glossary contains the defined terms from Australian Accounting Standards. References are by Standard and paragraph number or appendix reference.

Title Last Updated
AASB Glossary 30 Sep 2015

 

Definitions A

  • Term

    Definition

    Standard

    accountability

    The responsibility to provide information to enable users to make informed judgments about the performance, financial position, financing and investing, and compliance of the reporting entity.

    SAC 2.5

    accounting policies

    The specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial reports.

    AASB 108.5, AASB 114.8

    accounting profit

    The profit or loss for a period before deducting tax expense.

    AASB 112.5

    accrual basis of accounting

    The effects of transactions and other events are recognised when they occur (and not as cash or its equivalent is received or paid) and they are recorded in the accounting records and reported in the financial reports of the periods to which they relate.

    F.22

    accrued benefits

    Benefits the plan is presently obliged to transfer in the future to members and beneficiaries as a result of membership of the plan up to the reporting date and, in the case of defined contribution plans, encompasses benefits which have been allocated to individual members’ accounts and benefits not yet so allocated.

    AAS 25.10

    accumulating compensated absences

    Compensated absences that are carried forward and can be used in future periods if the current period’s entitlement is not used in full.

    AASB 119.13

    acquisition costs

    The fixed and variable costs of acquiring new business, including commissions and similar distribution costs, and costs of accepting, issuing and initially recording policies.

    (Acquisition costs relate to the costs incurred in acquiring specific life insurance contracts during the reporting period.  They do not include the general growth and development costs incurred by a life insurer.)

    AASB 1038.20.1

    acquisition date

    The date on which the acquirer effectively obtains control of the acquiree.

    AASB 3.A

    active market

    A market in which all the following conditions exist:

    (a)    the items traded within the market are homogeneous;

    (b)    willing buyers and sellers can normally be found at any time; and

    (c)    prices are available to the public.

    AASB 136.6, AASB 138.8, AASB 141.8

    actuarial assumptions

    An entity’s unbiased and mutually compatible best estimates of the demographic and financial variables that will determine the ultimate cost of providing post-employment benefits.

    AASB 119.72-73

    actuarial gains and losses

    Actuarial gains and losses comprise:

    (a)    experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred) ; and

    (b)    the effects of changes in actuarial assumptions.

    AASB 119.7

    agreement date (for a business combination)

    The date that a substantive agreement between the combining parties is reached and, in the case of publicly listed entities, announced to the public. In the case of a hostile takeover, the earliest date that a substantive agreement between the combining parties is reached is the date that a sufficient number of the acquiree’s owners have accepted the acquirer’s offer for the acquirer to obtain control of the acquiree.

    AASB 136.6, (AASB 138.8) , AASB 3.A

    agricultural activity

    The management by an entity of the biological transformation of biological assets for sale, into agricultural produce, or into additional biological assets.

    AASB 141.5

    agricultural produce

    The harvested product of the entity’s biological assets.

    AASB 141.5

    amortisation (depreciation*)

    The systematic allocation of the depreciable amount of an asset over its useful life.

    * In the case of an intangible asset or goodwill, the term ‘amortisation’ is generally used instead of ‘depreciation’.  Both terms have the same meaning.

    AASB 136.6, AASB 138.8

    amortised cost of a financial asset or financial liability

    The amount at which the financial asset or liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectability.

    AASB 139.9

    annual reporting period

    The financial year or similar period to which an annual financial report relates.

    AASB 101.Aus11.1

    antidilution

    An increase in earnings per share or a reduction in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions.

    AASB 133.5

    area of interest

    An individual geological area which is considered to constitute a favourable environment for the presence of a mineral deposit or an oil or natural gas field, or has been proved to contain such a deposit or field.

    AASB 6.A

    asset

    A resource:

    (a)    controlled by an entity as a result of past events; and

    (b)    from which future economic benefits are expected to flow to the entity.

    Future economic benefits controlled by the entity as a result of past transactions or other past events.

    AASB 138.8, (F.49(a) )

    AAS 27.12,  AAS 29.17.1, AAS 31.22.1

    assets held by a long-term employee benefit fund

    Assets (other than non-transferable financial instruments issued by the reporting entity) that:

    (a)    are held by an entity (a fund) that is legally separate from the reporting entity and exists solely to pay or fund employee benefits; and

    (b)    are available to be used only to pay or fund employee benefits, are not available to the reporting entity’s own creditors (even in bankruptcy) , and cannot be returned to the reporting entity, unless either:

             (i)     the remaining assets of the fund          are sufficient to meet all the          related employee benefit          obligations of the plan or the          reporting entity; or

             (ii)    the assets are returned to the          reporting entity to reimburse it          for employee benefits already          paid.

    AASB 119.7

    associate

    An entity, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

    AASB 128.2

    attachment date

    For a direct insurer, the date as from which the insurer accepts risk from the insured under an insurance contract or endorsement or, for a reinsurer, the date from which the reinsurer accepts risk from the direct insurer or another reinsurer under a reinsurance arrangement.

    AASB 1023.19.1

    Australian equivalents to IFRSs

    Australian equivalents to IFRSs comprise:

    (a)    Accounting Standards issued by the Australian Accounting Standards Board (AASB) that are equivalent to Standards issued by the International Accounting Standards Board (IASB) , being AASBs 1 – 99 corresponding to the IFRS series and AASBs 101 – 199 corresponding to the IAS series; and

    (b)    UIG Interpretations issued by the AASB corresponding to the Interpretations adopted by the IASB, as listed in AASB 1048 Interpretation and Application of Standards. 

    AASB 1.A, AASB 101.Aus.11.1

    available-for-sale financial assets

    Those non-derivative financial assets that are designated as available for sale or are not classified as (a) loans and receivables, (b) held-to-maturity investments, or (c) financial assets at fair value through profit or loss. 

    AASB 139.9

Definitions B

  • Term

    Definition

    Standard

    bank

    A financial institution one of whose principal activities is to take deposits and borrow with the objective of lending and investing and which is within the scope of banking or similar legislation.

    AASB 130.2

    basic earnings per share

    Profit for the period that is attributable to ordinary shareholders (the numerator) divided by the weighted average number of ordinary shares outstanding during the period (the denominator) .

    AASB 133.10

    beneficiaries

    Those persons who are currently receiving, or are currently entitled to receive, benefits from the superannuation plan.

    AAS 25.10

    biological asset

    A living animal or plant. 

    AASB 141.5

    biological transformation

    The processes of growth, degeneration, production, and procreation that cause qualitative or quantitative changes in a biological asset.

    AASB 141.5

    borrowing costs

    Interest and other costs incurred by an entity in connection with the borrowing of funds.

    AASB 123.4

    business

    An integrated set of activities and assets conducted and managed for the purpose of providing:
    (a)    a return to investors; or
    (b)    lower costs or other economic benefits directly and proportionately to policyholders or participants.
    A business generally consists of inputs, processes applied to those inputs, and resulting outputs that are, or will be, used to generate revenues. If goodwill is present in a transferred set of activities and assets, the transferred set shall be presumed to be a business.

    AASB 3.A

    business combination

    The bringing together of separate entities or businesses into one reporting entity.

    AASB 3.A

    business segment

    A distinguishable component of an entity that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments.

    AASB 114.9

    business undertaking

    Any financial or business undertaking or scheme that is carried on by means of or through an unincorporated association, a joint venture, partnership or trust.

    AAS 22.13

Definitions C

  • Term

    Definition

    Standard

    capacity

    Ability or power, whether direct or indirect, and includes ability or power that is presently exercisable as a result of, by means of, in breach of, or by revocation of, any of or any combination of the following:
    (a) trusts;
    (b) relevant agreements; and
    (c) practices;
    whether or not enforceable.

    AAS 22.13,   AAS 31.22.1

    capital

    Under a financial concept of capital, such as invested money or invested purchasing power, the net assets or equity of the entity.  The financial concept of capital is adopted by most entities.
    Under a physical concept of capital, such as operating capability, the productive capacity of the entity based on, for example, units of output per day.

    F.102

    capitalisation

    Recognising a cost as part of the cost of an asset.

    AASB 123.11

    carrying amount

    The amount at which an asset is recognised after deducting any accumulated depreciation (amortisation) and accumulated impairment losses thereon.

    AASB 136.6, AASB 116.6, AASB 138.8

     

    The amount at which an asset is recognised in the balance sheet.

    AASB 140.5, AASB 141.8

    cash

    Cash on hand and demand deposits.

    AASB 107.6

    cash equivalents

    Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

    AASB 107.6

    cash flow interest rate risk

    The risk that future cash flows of a monetary financial instrument will fluctuate because of changes in market interest rates.  In the case of a floating rate debt instrument, for example, such fluctuations result in a change in the effective interest rate of the financial instrument, usually without a corresponding change in its fair value.

    AASB 132.52(d)

    cash flows

    Inflows and outflows of cash and cash equivalents.

    AASB 107.6

    cash generating unit

    The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

    AASB 136.6, AASB 5.A

    cash-settled share-based payment transaction

    A share-based payment transaction in which the entity acquires goods or services by incurring a liability to transfer cash or other assets to the supplier of those goods or services for amounts that are based on the price (or value) of the entity’s shares or other equity instruments of the entity.

    AASB 2.A

    cedant

    The policyholder under a reinsurance contract.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    change in accounting estimate

    An adjustment of the carrying amount of an asset or a liability, or the amount of the periodic consumption of an asset, that results from the assessment of the present status of, and expected future benefits and obligations associated with, assets and liabilities. Changes in accounting estimates result from new information or new developments and, accordingly, are not corrections of errors.

    AASB 108.5

    chief executive officer (CEO)

    A person holding the position or office that is accepted legally or constructively to have the most authority within the reporting entity, whether or not subject to a governing body.

    AASB 1046.12.1

    claim

    A demand by any party external to the entity for payment by the insurer on account of an alleged loss resulting from an insured event or events, that have occurred, alleged to be covered by an insurance contract.

    AASB 1023.19.1

    claims expense

    The charge to the income statement for the reporting period and represents the sum of claims settled and claims management expenses relating to claims incurred in the period and the movement in the gross outstanding claims liability in the period.

    AASB 1023.19.1

    claims incurred

    Claims that have occurred prior to the reporting date, the claims could be reported or unreported at the reporting date. 

    AASB 1023.19.1

    class of assets

    Grouping of assets of a similar nature and use in an entity’s operations.

    AASB 116.37, (AASB 132.55)

    class of non-current assets

    A category of non-current assets having a similar nature or function in the operations of the entity, which category, for the purpose of disclosure in the financial report, is shown as a single item without supplementary dissection.

    AAS 31.22.1

    close members of the family of an individual

    Those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity. They may include:
    (a)    the individual’s domestic partner and children;
    (b)    children of the individual’s domestic partner; and
    (c)    dependants of the individual or the individual’s domestic partner.

    AASB 124.9

    closing rate

    The spot exchange rate at the reporting date.

    AASB 121.8

    commencement of the lease term

    The date from which the lessee is entitled to exercise its right to use the leased asset. It is the date of initial recognition of the lease (i.e. the recognition of the assets, liabilities, income or expenses resulting from the lease, as appropriate) .

    AASB 117.4

    comparability

    Means that quality of financial information which exists when users of that information are able to discern and evaluate similarities in, and differences between, the nature and effects of transactions and events, at one time and over time, either when assessing aspects of a single reporting entity or of a number of reporting entities.

    AAS 31.22.1

    compensation

    Includes all employee benefits (as defined in AASB 119 Employee Benefits) including employee benefits to which AASB 2 Share-based Payment applies.  Employee benefits are all forms of consideration paid, payable or provided by the entity, or on behalf of the entity, in exchange for services rendered to the entity. It also includes such consideration paid on behalf of a parent of the entity in respect of the entity. Compensation includes:
    (a)    short-term employee benefits, such as wages, salaries and social security contributions, paid annual leave and paid sick leave, profit-sharing and bonuses (if payable within twelve months of the end of the period) and non-monetary benefits (such as medical care, housing, cars and free or subsidised goods or services) for current employees;
    (b)    post-employment benefits such as pensions, other retirement benefits, post-employment life insurance and post-employment medical care;
    (c)    other long-term employee benefits, including long-service leave or sabbatical leave, jubilee or other long-service benefits, long-term disability benefits and, if they are not payable wholly within twelve months after the end of the period, profit-sharing, bonuses and deferred compensation;
    (d)    termination benefits; and
    (e)    share-based payment.

    AASB 124.9

    compliance

    Adherence to those statutory requirements, regulations, rules, ordinances, directives or other externally-imposed requirements in respect of which non-compliance may have, or may have had, a financial effect on the reporting entity.

    SAC 2.5

    component of an entity

    Operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity.

    AASB 5.A

    compound instrument

    A financial instrument that, from the issuer’s perspective, contains both a liability and an equity element.

    AASB 132.28

    consolidated financial statements

    The financial statements of a group presented as those of a single economic entity.

    AASB 127.4, AASB 128.2

    construction contract

    A contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use.

    AASB 111.3

    constructive obligation

    An obligation that derives from an entity’s actions where:
    (a)    by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities; and
    (b)    as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.

    AASB 137.10

    contingent asset

    A possible asset that arises from past events  and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.

    AASB 137.10

    contingent liability

    (a)    A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
    (b)    a present obligation that arises from past events but is not recognised because:
     (i)     it is not probable that an                  outflow of resources embodying          economic benefits will be                required to settle the obligation;          or
     (ii)     the amount of the obligation          cannot be measured with                 sufficient reliability. 

    AASB 137.10, AASB 3.A

    contingent rent

    That portion of the lease payments that is not fixed in amount but is based on the future amount of a factor that changes other than with the passage of time (e.g. percentage of future sales, amount of future use, future price indices, future market rates of interest) .

    AASB 117.4

    contingent share agreement

    An agreement to issue shares that is dependent on the satisfaction of specified conditions.

    AASB 133.5

    contingently issuable ordinary shares

    Ordinary shares issuable for little or no cash or other consideration upon the satisfaction of specified conditions in a contingent share agreement.

    AASB 133.5

    contract

    An agreement between two or more parties that has clear economic consequences that the parties have little, if any, discretion to avoid, usually because the agreement is enforceable at law.  Contracts may take a variety of forms and need not be in writing.

    AASB 132.13

    contributions

    Non-reciprocal transfers to the entity.

    AASB 1004.A, AAS 27.12,  AAS 29.17.1, AAS 31.22.1

    contribution by owners

    Future economic benefits that have been contributed to the entity by parties external to the entity, other than those which result in liabilities of the entity, that give rise to a financial interest in the net assets of the entity which:
    (a)    conveys entitlement both to distributions of future economic benefits by the entity during its life, such distributions being at the discretion of the ownership group or its representatives, and to distributions of any excess of assets over liabilities in the event of the entity being wound up; and/or
    (b)    can be sold, transferred or redeemed.

    AASB 3.A, AASB 1004.A, AAS 27.12,  AAS 29.17.1, AAS 31.22.1

    control

    The capacity of an entity to dominate decision making, directly or indirectly, in relation to the financial and operating policies of another entity so as to enable that other entity to operate with it in achieving the objectives of the controlling entity.

    AAS 22.13,   AAS 31.22.1, AAS 29.17.1, SAC 1.6

    control (of an entity)

    The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

    AASB 124.9, AASB 127.4, AASB 128.2, (AASB 131.3) , (AASB 3.A)

    control of an asset

    The capacity of the entity to benefit from the asset in the pursuit of the entity’s objectives and to deny or regulate the access of others to that benefit.

    AAS 29.17.1, AAS 31.22.1

    corporate assets

    Assets other than goodwill that contribute to the future cash flows of both the cash-generating unit under review and other cash-generating units.

    AASB 136.6

    corridor

    A range around an entity’s best estimate of post-employment benefit obligations.  Outside that range, it is not reasonable to assume that actuarial gains or losses will be offset in future years.

    AASB 119.95

    cost

    The amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction or when applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of other Australian Accounting Standards, e.g. AASB 2 Share-based Payment.

    AASB 116.6,  AASB 138.8, AASB 140.5

    cost method

    A method of accounting for an investment whereby the investment is recognised at cost. The investor recognises income from the investment only to the extent that the investor receives distributions from retained earnings of the investee arising after the date of acquisition. Distributions received in excess of such earnings are regarded as a recovery of investment and are recognised as a reduction of the cost of the investment.

    AASB 127.4

    cost of acquisition

    The purchase consideration plus any costs incidental to the acquisition.

    AAS 31.22.1

    cost of conversion

    Costs directly related to the units of production, such as direct labour together with a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods.

    AASB 102.12

    cost of inventories

    All costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

    AASB 102.10

    cost of purchase

    All of the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities) , and transport, handling and other costs directly attributable to the acquisition of the item.  Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.

    AASB 102.11

    cost plus contract

    A construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a percentage of these costs or a fixed fee.

    AASB 111.3

    costs of disposal

    Incremental costs directly attributable to the disposal of an asset or cash-generating unit, excluding finance costs and income tax expense.

    AASB 136.6

    costs to sell

    The incremental costs directly attributable to the disposal of an asset (or disposal group) , excluding finance costs and income tax expense.

    AASB 5.A

    credit risk

    The risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.

    AASB 132.52(b)

    currency risk

    A market risk – The risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

    AASB        132.52 (a) (i)

    current asset

    An asset that satisfies any of the following criteria:
    (a)    it is expected to be realised in, or is intended for sale or consumption in, the entity’s normal operating cycle;
    (b)    it is held primarily for the purpose of being traded;
    (c)    it is expected to be realised within twelve months after the reporting date; or
    (d)    it is cash or a cash equivalent (as defined in AASB 107 Cash Flow Statements) unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

    AASB 101.57, AASB 5.A

    current cost

    The amount of cash or cash equivalents that would have to be paid if the same or an equivalent asset was acquired currently.
    The undiscounted amount of cash or cash equivalents that would be required to settle an obligation currently.

    F.100(b)

    current liabilities

    A liability shall be classified as current when it satisfies any of the following criteria:
    (a)    it is expected to be settled in the entity’s normal operating cycle;
    (b)    it is held primarily for the purpose of being traded;
    (c)    it is due to be settled within twelve months after the reporting date; or
    (d)    the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
    All other liabilities shall be classified as non-current.

    AASB 101.60

    current replacement cost

    The cost the entity would incur to acquire the asset on the reporting date.

    AASB 102.Aus6.1

    current service cost

    The increase in the present value of the defined benefit obligation resulting from employee service in the current period.

    AASB 119.7

    current tax

    The amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period.

    AASB 112.5

    curtailment

    A curtailment occurs when an entity either:
    (a)    is demonstrably committed to make a material reduction in the number of employees covered by a plan; or
    (b)    amends the terms of a defined benefit plan such that a material element of future service by current employees will no longer qualify for benefits, or will qualify only for reduced benefits.

    AASB 119.111

Definitions D

  • Term

    Definition

    Standard

    date of exchange

    When a business combination is achieved in a single exchange transaction, the date of exchange is the acquisition date. When a business combination involves more than one exchange transaction, for example when it is achieved in stages by successive share purchases, the date of exchange is the date that each individual investment is recognised in the financial report of the acquirer.

    AASB 3.A

    date of transition to Australian equivalents to IFRSs

    The beginning of the earliest annual reporting period for which an entity presents full information under Australian equivalents to IFRSs as comparative information in its first Australian-equivalents-to-IFRSs financial report.

    AASB 1.A

    deductible temporary difference

    A temporary difference that will result in amounts that are deductible in determining taxable profit (tax loss)of future periods when the carrying amount of the asset or liability is recovered or settled.

    AASB 112.5

    deemed cost

    An amount used as a surrogate for cost or depreciated cost at a given date. Subsequent depreciation or amortisation assumes that the entity had initially recognised the asset or liability at the given date and that its cost was equal to the deemed cost.

    AASB 1.A

    deferred tax assets

    The amounts of income taxes recoverable in future periods in respect of:
    (b)    the carryforward of unused tax losses; and
    (c)    the carryforward of unused tax credits.

    AASB 112.5

    deferred tax liabilities

    The amounts of income taxes payable in future periods in respect of taxable temporary differences.

    AASB 112.5

    defined benefit liability

    The net total of the following amounts:
    (a)    the present value of the defined benefit obligation at the reporting date;
    (b)    plus any actuarial gains (less any actuarial losses)not recognised;
    (c)    minus any past service cost not yet recognised;
    (d)    minus the fair value at the reporting date of plan assets (if any)out of which the obligations are to be settled directly.

    AASB 119.54

    defined benefit obligation (present value of)

    The present value, without deducting any plan assets, of expected future payments required to settle the obligation resulting from employee service in the current and prior periods.

    AASB 119.7

    defined benefit plans

    Post-employment benefit plans other than defined contribution plans.

    AASB 119.7

     

    A superannuation plan where the amounts to be paid to one or more members, if they were to remain members until normal retirement age, are specified, or are determined, at least in part, by reference to a formula based on their years of membership and/or salary levels, and encompasses all plans other than defined contribution plans.

    AAS 25.10

    defined contribution plans

    Post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund)and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

    AASB 119.7

    A superannuation plan where the amounts to be paid to members, if they were to remain members until normal retirement age, are determined by reference to accumulated contributions made to the plan, together with investment earnings thereon.

    AAS 25.10

    demonstrably committed

    An entity is demonstrably committed to pay termination benefits when, and only when, an entity has a detailed formal plan for the termination and is without realistic possibility of withdrawal.  The detailed plan shall include, as a minimum:
    (a)    the location, function, and approximate number of employees whose services are to be terminated;
    (b)    the termination benefits for each job classification or function; and
    (c)    the time at which the plan will be implemented.  Implementation shall begin as soon as possible and the period of time to complete implementation shall be such that material changes to the plan are not likely.

    AASB 119.134

    deposit component

    A contractual component that is not accounted for as a derivative under AASB 139 and would be within the scope of AASB 139 if it were a separate instrument.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    deposit premium

    The premium charged by the insurer at the inception of a contract under which the final premium depends on conditions prevailing over the contract period and so is not determined until the expiry of that period.

    AASB 1023.19.1

    depreciable amount

    The cost of an asset, or other amount substituted for cost, less its residual value.

    AASB 116.6, (AASB 136.6, AASB 138.8)

    depreciable asset

    A non-current asset having a limited useful life.

    AAS 27.12,  AAS 29.17.1, AAS 31.22.1

    depreciated replacement cost

    the current replacement cost of an asset less, where applicable, accumulated depreciation calculated on the basis of such cost to reflect the already consumed or expired future economic benefits of the asset.

    AASB 136.Aus6.2

    depreciation (amortisation)*

    The systematic allocation of the depreciable amount of an asset over its useful life.

    * In the case of an intangible asset, the term ‘amortisation’ is generally used instead of ‘depreciation’.  The two terms have the same meaning.

    AASB 116.6, AASB 136.6

    derecognition (of a financial instrument)

    Derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s balance sheet.

    AASB 139.9

    derivative

    A financial instrument or other contract within the scope of this Standard (see paragraphs 2-7)with all three of the following characteristics:
    (a)    its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’);
    (b)    it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and
    (c)    it is settled at a future date.

    AASB 139.9

    derivative financial instruments

    Financial instruments such as financial options, futures and forwards, interest rate swaps and currency swaps, which create rights and obligations that have the effect of transferring between the parties to the instrument one or more of the financial risks inherent in an underlying primary financial instrument. On inception, derivative financial instruments give one party a contractual right to exchange financial assets or financial liabilities with another party under conditions that are potentially favourable, or a contractual obligation to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable. However, they generally do not result in a transfer of the underlying primary financial instrument on inception of the contract, nor does such a transfer necessarily take place on maturity of the contract. Some instruments embody both a right and an obligation to make an exchange. Because the terms of the exchange are determined on inception of the derivative instrument, as prices in financial markets change those terms may become either favourable or unfavourable.

    AASB 132 AG15-16

    development

    The application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services prior to the commencement of commercial production or use.

    AASB 138.8

    diluted earnings per share

    The amount of profit for the period that is attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding during the period, both adjusted for the effects of all dilutive potential ordinary shares.

    AASB 133.31

    dilution

    A reduction in earnings per share or an increase in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions.

    AASB 133.5

    dilutive potential ordinary shares

    Potential ordinary shares whose conversion to ordinary shares would decrease earnings per share or increase loss per share from continuing operations.

    AASB 133.41

    director

    (a)    Any person that directs an entity in its financial and operating activities independently or in concert with others (regardless of whether known by that title);
    (b)    any person occupying or acting in the position of director of an entity, by whatever name called and whether or not validly appointed to occupy or duly authorised to act in the position; or
    (c)    any person in accordance with whose directions or instructions the directors of an entity are accustomed to act.

    AAS 22.13

     

    Means:
    (a)    a person who, regardless of the name that is given to the position, is appointed:
             (i)  to the position of a director; or
             (ii) to the position of an alternate director and is acting in that capacity; or
             (iii) in the case of entities governed by bodies not called a board of directors, to the position of  member of the governing body, council, commission or authority;
    (b) unless the contrary intention appears, a person who is not validly appointed as a director if:
             (i) the person acts in the position of a director; or
             (ii) the directors of the entity are accustomed to act in accordance with the person’s instructions or wishes (except where the directors act on advice given by the person in the proper performance of functions attaching to the person’s professional capacity, or the person’s business relationship with the directors or the entity).

    AASB 124.Aus9.1, AASB 1046.12.1

    director-related entities

    In relation to particular directors, the spouses of such directors, relatives of such directors or spouses, and any other entity under the joint or several control or significant influence of such directors, spouses or relatives.

    AAS 22.13

    direct insurance contract

    An insurance contract that is not a reinsurance contract.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    direct method of reporting cash flows from operating activities

    A method which discloses major classes of gross cash receipts and gross cash payments.

    AASB 107.18(a)

    disclosing entity

    Is defined in the Corporations Act.

    AASB 1046.12.1, AASB 124.Aus9.1

    discontinued operation

    A component of an entity that either has been disposed of or is classified as held for sale and
    (a)    represents a separate major line of business or geographical area of operations;
    (b)    is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
    (c)    is a subsidiary acquired exclusively with a view to resale.

    AASB 5.A

    discretionary participation feature

    A contractual right to receive, as a supplement to guaranteed benefits, additional benefits:
    (a) that are likely to be a significant portion of the total contractual benefits;
    (b) whose amount or timing is contractually at the discretion of the issuer; and
    (c) that are contractually based on:
             (i) the performance of a specified pool of contracts or a specified type of contract;
             (ii) realised and/or unrealised investment returns on a specified pool of assets held by the issuer; or
             (iii) the profit or loss of the company, fund or other entity that issues the contract.

    AASB 4.A, AASB 1038.20.1

    disposal group

    A group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. The group includes goodwill acquired in a business combination if the group is a cash-generating unit to which goodwill has been allocated in accordance with the requirements of paragraphs 80-87 of AASB 136 Impairment of Assets (as revised in 2004)or if it is an operation within such a cash-generating unit.

    AASB 5.A

    distributions to owners

    Future economic benefits distributed by the entity to all or part of its ownership group, either as a return on investment or as a return of investment.

    AAS 29.17.1, AAS 31.22.1

    dividends

    Distributions of profits to holders of equity investments in proportion to their holdings of a particular class of capital.

    AASB 118.5

Definitions E

  • economically recoverable reserves

    The estimated quantity of product in an area of interest that can be expected to be profitably extracted, processed and sold under current and foreseeable economic conditions. 

    AASB 6.A

    economic entity

    A group of entities comprising the parent entity and each of the entities that it controls.

    AAS 22.13,  AAS 29.17.1, (AASB 1046.12.1)

     

    A group of entities comprising a controlling entity and one or more controlled entities operating together to achieve objectives consistent with those of the controlling entity.

    SAC 1.6

    economic life

    Either:
    (a)    the period over which an asset is expected to be economically usable by one or more users; or
    (b)    the number of production or similar units expected to be obtained from the asset by one or more users.

    AASB 117.4

    economy

    The extent to which resources of a given quality were acquired at the lowest acquisition cost.

    AAS 29.17.1

    effectiveness

    The extent to which the entity achieved the objectives established for its operations or activities, whether those objectives were expressed in terms of outputs or outcomes.

    AAS 29.17.1

    efficiency

    The extent to which the entity maximised the outputs produced from a given set of inputs or minimised the input cost of producing a given level and quality of outputs.

    AAS 29.17.1

    effective interest method

    The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see AASB 118) , transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to estimate reliably the cash flows or the expected life of a financial instrument (or group of financial instruments) , the entity shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments) .

    AASB 139.9

    element

    Assets, liabilities, equity, revenues and expenses.

    AAS 29.17.1

    embedded derivative

    A component of a hybrid (combined) instrument that also includes a non-derivative host contract-with the effect that some of the cash flows of the combined instrument vary in a way similar to a stand-alone derivative. An embedded derivative causes some or all of the cash flows that otherwise would be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable. A derivative that is attached to a financial instrument but is contractually transferable independently of that instrument, or has a different counterparty from that instrument, is not an embedded derivative, but a separate financial instrument.

    AASB 139.10

    employee

    A natural person (including a director) appointed or engaged under a contract for services who is subject to the direction of an employer in respect of the manner of execution of those services, whether on a full-time, part-time, permanent, casual or temporary basis.

    AASB 1046.12.1

    employee benefits

    All forms of consideration given by an entity in exchange for service rendered by employees.

    AASB 119.7

    employees and others providing similar services

    Individuals who render personal services to the entity and either (a) the individuals are regarded as employees for legal or tax purposes, (b) the individuals work for the entity under its direction in the same way as individuals who are regarded as employees for legal or tax purposes, or (c) the services rendered are similar to those rendered by employees. For example, the term encompasses all management personnel, i.e. those persons having authority and responsibility for planning, directing and controlling the activities of the entity, including non-executive directors.

    AASB 2.A

    entity

    Any legal, administrative, or fiduciary arrangement, organisational structure or other party (including a person) having the capacity to deploy scarce resources in order to achieve objectives.

    AASB 101.Aus11.1 AAS 22.13,  AAS 25.10,  AAS 27.12,  AAS 29.17.1, AAS 31.22.1, SAC 1.6

    entity-specific value

    The present value of the cash flows an entity expects to arise from the continuing use of an asset and from its disposal at the end of its useful life or expects to incur when settling a liability.

    AASB 116.6, AASB 138.8

    equity

    The residual interest in the assets of the entity after deducting all its liabilities.

    F.49(c)          AAS 27.12,  AAS 29.17.1, AAS 31.22.1

    equity compensation

    Means employee benefits in the form of:
    (a)    equity instruments of the entity required to prepare the financial report or any of its subsidiaries; or
    (b)    rights to equity instruments that may, at the discretion of the entity, be settled either by cash payments or equity instruments of the entity required to prepare the financial report or any of its subsidiaries.

    AASB 1046.12.1

    equity instrument

    A contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

    AASB 132.11, AASB 2.A, AASB 1046.12.1

    equity instrument granted

    The right (conditional or unconditional) to an equity instrument of the entity conferred by the entity on another party, under a share-based payment arrangement.

    AASB 2.A

    equity method

    A method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the investor’s share of net assets of the investee. The profit or loss of the investor includes the investor’s share of the profit or loss of the investee.

    AASB 128.2, (AASB 131.3)

    equity-settled share-based payment transaction

    A share-based payment transaction in which the entity receives goods or services as consideration for equity instruments of the entity (including shares or share options) .

    AASB 2.A

    events after the reporting date

    Events after the reporting date are those events, favourable and unfavourable, that occur between the reporting date and the date when the financial report is authorised for issue.  Two types of events can be identified:
    (a)    those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date) ; and
    (b)    those that are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date) .

    AASB 110.3

    exchange difference

    The difference resulting from translating a given number of units of one currency into another currency at different exchange rates.

    AASB 121.8

    exchange rate

    The ratio of exchange for two currencies.

    AASB 121.8

    executive

    A person who is directly accountable and responsible for the strategic direction and operational management of the entity.

    AASB 1046.12.1, AASB 124.Aus9.1

    expenses

    Decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants.

    F.70(b)

     

    Consumptions or losses of future economic benefits in the form of reductions in assets or increases in liabilities of the entity, other than those relating to distributions to owners, that result in a decrease in equity during the reporting period.

    AAS 27.12,  AAS 29.17.1, AAS 31.22.1

    experience adjustments

    The effect of differences between previous actuarial assumptions and what has actually occurred.

    AASB 119.7

    exploration and evaluation assets

    Exploration and evaluation expenditures recognised as assets in accordance with the entity’s accounting policy.

    AASB 6.A

    exploration and evaluation expenditures

    Expenditures incurred by an entity in connection with the exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.

    AASB 6.A

    exploration for and evaluation of mineral resources

    The search for mineral resources, including minerals, oil, natural gas and similar non-regenerative resources after the entity has obtained legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource. 

    AASB 6.A

Definitions F

  • Term

    Definition

    Standard

    fair value

    The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

    AASB 102.6, (AASB 116.6) , AASB 117.4, AASB 118.7, (AASB 119.7) ,  AASB 121.8, AASB 132.11, (AASB 138.8) , AASB 139.9, AASB 140.5, AASB 1.A, (AASB 2.A) , AASB 3.A, AASB 4.A, AASB 5.A, AASB 1023.19.1, AASB 1038.20.1,  AAS 29.17.1,     AAS 31.22.1, AASB 120.3, AAS 22.13,  AAS 27.12

    fair value interest rate risk

    A market risk – The risk that the value of a financial instrument will fluctuate because of changes in market interest rates.

    AASB  132.52(a) (ii)

    fair value less costs to sell

    The amount obtainable from the sale of an asset or cash-generating unit in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

    AASB 136.6

    FIFO (first-in, first-out)

    The assumption that the items of inventory that were purchased or produced first are sold first, and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced.

    AASB 102.27

    finance lease

    A lease that transfers substantially all the risks and rewards incident to ownership of an asset.  Title may or may not eventually be transferred.

    AASB 117.4

    financial asset

    Any asset that is:
    (a)    cash;
    (b)    an equity instrument of another entity;
    (c)    a contractual right:
             (i)     to receive cash or another         financial asset from another          entity; or
             (ii)    to exchange financial assets or          financial liabilities with another          entity under conditions that are          potentially favourable; or
    (d)    a contract that will or may be settled in the entity’s own equity instruments and is:
             (i)     a non-derivative for which the          entity is or may be obliged to          receive a variable number of the          entity’s own equity instruments;          or
             (ii)    a derivative that will or may be                  settled other than by the                                  exchange of a fixed amount of              cash or another financial asset                  for a fixed number of the                          entity’s own equity instruments.                  For this purpose the entity’s                           own equity instruments do not           include instruments that are                    themselves contracts for the                  future receipt or delivery of the                  entity’s own equity instruments.

    AASB 132.11, AASB 1023.19.1, AASB 1038.20.1

    financial asset or financial liability at fair value through profit or loss

    A financial asset or financial liability that meets either of the following conditions:
    (a)    it is classified as held for trading. A financial asset or financial liability is classified as held for trading if it is:
             (i)     acquired or incurred principally          for the purpose of selling or          repurchasing it in the near term;
             (ii)    part of a portfolio of identified          financial instruments that are          managed together and for which          there is evidence of a recent          actual pattern of short-term          profit-taking; or
             (iii)   a derivative (except for a          derivative that is a designated          and effective hedging          instrument) ; or
    (b)    upon initial recognition it is designated by the entity as at fair value through profit or loss. Any financial asset or financial liability within the scope of this Standard may be designated when initially recognised as a financial asset or financial liability at fair value through profit or loss except for investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured (see paragraph 46(c) and Appendix A paragraphs AG80 and AG81) .

    AASB 139.9

    financial institution

    (a)    an entity (including an economic entity) whose principal activity is to take deposits or borrow, or both take deposits and borrow, with the objective of lending or investing in financial assets other than equity instruments, but excluding:
             (i)     entities which take deposits or          borrow principally from other          entities in the economic entity
             (ii)    general insurers, life insurers          and superannuation plans; or
    (b)    an entity (including an economic entity) subject to the Banking Act 1959 or any replacement legislation.

    AAS 31.22.1

    financial instrument

    Any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity.

    AASB 132.11, AASB 1023.19.1, AASB 1038.20.1

    financial liability

    Any liability that is:
    (a)    a contractual obligation:
             (i)     to deliver cash or another          financial asset to another entity;          or
             (ii)    to exchange financial assets or          financial liabilities with another          entity under conditions that are          potentially unfavourable to the          entity; or
    (b)    a contract that will or may be settled in the entity’s own equity instruments and is:
             (i)     a non-derivative for which the          entity is or may be obliged to          deliver a variable number of the          entity’s own equity instruments;          or
             (ii)    a derivative that will or may be          settled other than by the          exchange of a fixed amount of          cash or another financial asset          for a fixed number of the          entity’s own equity instruments.          For this purpose the entity’s          own equity instruments do not          include instruments that are          themselves contracts for the          future receipt or delivery of the          entity’s own equity instruments.

    AASB 132.11, AASB 1023.19.1, AASB 1038.20.1

    financial position

    The relationship of the assets, liabilities, and equities of an entity, as reported in the balance sheet.

    The economic condition of a reporting entity, having regard to its control over resources, financial structure, capacity for adaptation and solvency.

    F.47

    SAC 2.5

    financial risk

    The risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    financial statements

    A complete set of financial statements comprises:
    (a)    balance sheet;
    (b)    income statement;
    (c)    a statement showing either:
             (i)     all changes in equity; or
             (ii)    changes in equity other than          those arising from transactions          with equity holders acting in          their capacity as equity holders;
    (d)    a cash flow statement; and
    (e)    notes, comprising a summary of significant accounting policies and other explanatory notes.

    AASB 101.8, (F.7)

    financing activities

    Activities that result in changes in the size and composition of the contributed equity and borrowings of the entity.

    AASB 107.6

    financing and investing

    Those activities of a reporting entity that relate to the financing of its operations and the investment of its resources.

    SAC 2.5

    firm commitment

    A binding agreement for the exchange of a specified quantity of resources at a specified price on a specified future date or dates.

    AASB 139.9

    firm purchase commitment

    An agreement with an unrelated party, binding on both parties and usually legally enforceable, that (a) specifies all significant terms, including the price and timing of the transactions, and (b) includes a disincentive for non-performance that is sufficiently large to make performance highly probable.

    AASB 5.A

    first Australian-equivalents-to-IFRSs financial report

    The first annual financial report in which an entity adopts Australian equivalents to IFRSs, by an explicit and unreserved statement of compliance with Australian equivalents to IFRSs.

    AASB 1.A

    first Australian-equivalents-to-IFRSs reporting period

    The reporting period ending on the reporting date of an entity’s first Australian-equivalents-to-IFRSs financial report.

    AASB 1.A

    first-time adopter

    An entity that presents its first Australian-equivalents-to-IFRSs financial report.

    AASB 1.A

    fixed price contract

    A construction contract in which the contractor agrees to a fixed contract price, or a fixed rate per unit of output, which in some cases is subject to cost escalation clauses.

    AASB 111.3

    fixed production overheads

    Those indirect costs of production that remain relatively constant regardless of the volume of production, such as depreciation and maintenance of factory buildings and equipment, and the cost of factory management and administration.

    AASB 102.12

    forecast transaction

    An uncommitted but anticipated future transaction.

    AASB 139.9

    foreign currency

    A currency other than the functional currency of the entity.

    AASB 121.8

    foreign currency transaction

    A transaction that is denominated in or requires settlement in a foreign currency.

    AASB 121.20

    foreign operation

    An entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.

    AASB 121.8

    forgivable loans

    Loans which the lender undertakes to waive repayment of under certain prescribed conditions.

    AASB 120.3

    former key management personnel

    A person who was a specified director or specified executive in the immediately preceding reporting period but is not specified in the current reporting period.

    AASB 124.Aus9.1

    functional currency

    The currency of the primary economic environment in which the entity operates.

    AASB 121.8

    funding

    Contributions by an entity, and sometimes its employees, into an entity, or fund, that is legally separate from the reporting entity and from which the employee benefits are paid.

    AASB 119.49

    future claims

    Claims in respect of insured events that are expected to occur in future reporting periods under policies where the attachment date is prior to the reporting date.

    AASB 1023.19.1

    future economic benefit

    The potential to contribute, directly or indirectly, to the flow of cash and cash equivalents to the entity.  The potential may be a productive one that is part of the operating activities of the entity.  It may also take the form of convertibility into cash or cash equivalents or a capability to reduce cash outflows, such as when an alternative manufacturing process lowers the costs of production.

    F.53

Definitions G

  • Term

    Definition

    Standard

    gains

    Increases in economic benefits and as such are no different in nature from revenue.

    F.75

    general insurance contract

    An insurance contract that is not a life insurance contract.

    AASB 1023.19.1, AASB 1038.20.1

    general insurer

    An insurer that writes general insurance contracts. 

    AASB 1023.19.1

    general purpose financial report

    A financial report intended to meet the information needs common to users who are unable to command the preparation of reports tailored so as to satisfy, specifically, all of their information needs.

    AASB 101.Aus11.1, AAS 22.13,  AAS 25.10,            AAS 27.12,           AAS 29.17.1,      AAS 31.22.1,         SAC 1.6,          SAC 2.5

    general reinsurance contract

    A reinsurance contract that is not a life reinsurance contract.

    AASB 1023.19.1

    geographical segments

    A distinguishable component of an entity that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.

    AASB 114.9

    going concern

    The entity is normally viewed as a going concern, that is, as continuing in operation for the foreseeable future.  It is assumed that the entity has neither the intention nor the necessity of liquidation or of curtailing materially the scale of its operations.

    AASB      101.23-24,      F.23

    goodwill

    Future economic benefits arising from assets that are not capable of being individually identified and separately recognised.

    AASB 3.A

    government

    Government, government agencies and similar bodies whether local, national or international.

    AASB 120.3

     

    Means the Commonwealth Government, or the Government of the Australian Capital Territory, New South Wales, the Northern Territory, Queensland, South Australia, Tasmania, Victoria or Western Australia.

    AAS 31.22.1

    government assistance

    Action by government designed to provide an economic benefit specific to an entity or range of entities qualifying under certain criteria.  Government assistance for the purpose of this Standard does not include benefits provided only indirectly through action affecting general trading conditions, such as the provision of infrastructure in development areas or the imposition of trading constraints on competitors. 

    AASB 120.3

    government department

    A government controlled entity, created pursuant to administrative arrangements or otherwise designated as a government department by the government which controls it.

    AAS 29.17.1

    government grants

    Assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to the operating activities of the entity.  They exclude those forms of government assistance which cannot reasonably have a value placed upon them and transactions with government which cannot be distinguished from the normal trading transactions of the entity.

    AASB 120.3, AASB 141.8

    grant date

    The date at which the entity and another party (including an employee) agree to a share-based payment arrangement, being when the entity and the counterparty have a shared understanding of the terms and conditions of the arrangement. At grant date the entity confers on the counterparty the right to cash, other assets, or equity instruments of the entity, provided the specified vesting conditions, if any, are met. If that agreement is subject to an approval process (for example, by shareholders) , grant date is the date when that approval is obtained.

    AASB 2.A (AASB 1046.12.1)

    grants related to assets

    Government grants whose primary condition is that an entity qualifying for them shall purchase, construct or otherwise acquire long-term assets.  Subsidiary conditions may also be attached restricting the type or location of the assets or the periods during which they are to be acquired or held.

    AASB 120.3

    grants related to income

    Government grants other than those related to assets.

    AASB 120.3

    gross investment in the lease

    The aggregate of:
    (a)    the minimum lease payments receivable by the lessor under a finance lease; and
    (b)    any unguaranteed residual value accruing to the lessor.

    AASB 117.4

    group

    A parent and all its subsidiaries.

    AASB 121.8, AASB 127.4

    group administration (employee benefit) plans

    An aggregation of single employer plans combined to allow participating employers to pool their assets for investment purposes and reduce investment management and administration costs, but the claims of different employers are segregated for the sole benefit of their own employees. 

    AASB 119.33

    group of biological assets

    An aggregation of similar living animals or plants.

    AASB 141.5

    guaranteed benefits

    Payments or other benefits to which a particular policyholder or investor has an unconditional right that is not subject to the contractual discretion of the issuer.

    AASB 4.A, AASB 1038.20.1

    guaranteed element

    An obligation to pay guaranteed benefits, included in a contract that contains a discretionary participation feature.

    AASB 4A, AASB 1038.20.1

    guaranteed residual value

    (a)    for a lessee, that part of the residual value that is guaranteed by the lessee or by a party related to the lessee (the amount of the guarantee being the maximum amount that could, in any event, become payable) ; and
    (b)    for a lessor, that part of the residual value that is guaranteed by the lessee or by a third party unrelated to the lessor that is financially capable of discharging the obligations under the guarantee.

    AASB 117.4

Definitions H

  • Term

    Definition

    Standard

    harvest

    The detachment of produce from a biological asset or the cessation of a biological asset’s life processes.

    AASB 141.5

    hedge effectiveness

    The degree to which changes in the fair value or cash flows of the hedged item that are attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument (see AASB 139 Appendix A paragraphs AG105-AG113) .

    AASB 139.9

    hedged item

    A hedged item is an asset, liability, firm commitment, highly probable forecast transaction or net investment in a foreign operation that (a) exposes the entity to risk of changes in fair value or future cash flows and (b) is designated as being hedged (AASB 139 paragraphs 78-84 and Appendix A paragraphs AG98-AG101 elaborate on the definition of hedged items) .

    AASB 139.9

    hedging instrument

    A designated derivative or (for a hedge of the risk of changes in foreign currency exchange rates only) a designated non-derivative financial asset or non-derivative financial liability whose fair value or cash flows are expected to offset changes in the fair value or cash flows of a designated hedged item (AASB 139 paragraphs 72-77 and Appendix A paragraphs AG94-AG97 elaborate on the definition of a hedging instrument) .

    AASB 139.9

    held-to-maturity investment

    Non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity (see Appendix A paragraphs AG16-AG25) other than:
    (a)    those that the entity upon initial recognition designates as at fair value through profit or loss;
    (b)    those that the entity designates as available for sale; and
    (c)    those that meet the definition of loans and receivables.

    An entity shall not classify any financial assets as held to maturity if the entity has, during the current annual reporting period or during the two preceding annual reporting periods, sold or reclassified more than an insignificant amount of held-to-maturity investments before maturity (more than insignificant in relation to the total amount of held-to-maturity investments) other than sales or reclassifications that:
    (i)     are so close to maturity or the financial asset’s call date (for example, less than three months before maturity) that changes in the market rate of interest would not have a significant effect on the financial asset’s fair value;
    (ii)    occur after the entity has collected substantially all of the financial asset’s original principal through scheduled payments or prepayments; or
    (iii)   are attributable to an isolated event that is beyond the entity’s control, is non-recurring and could not have been reasonably anticipated by the entity.

    AASB 139.9

    highly probable

    Significantly more likely than probable.

    AASB 5.A

    hire-purchase contract

    The definition of a lease includes contracts for the hire of an asset which contain a provision giving the hirer an option to acquire title to the asset upon the fulfilment of agreed conditions.  These contracts are sometimes known as hire purchase contracts.

    AASB 117.6

    historical cost

    Assets are recorded at the amount of cash or cash equivalents paid or the fair value of the consideration given to acquire them at the time of their acquisition.  Liabilities are recorded at the amount of proceeds received in exchange for the obligation, or in some circumstances (for example, income taxes) , at the amounts of cash or cash equivalents expected to be paid to satisfy the liability in the normal course of business.

    F.100(a)

    hyperinflation

    Loss of purchasing power of money at such a rate that comparison of amounts from transactions and other events that have occurred at different times, even within the same reporting period, is misleading. 

    Hyperinflation is indicated by characteristics of the economic environment of a country which include, but are not limited to, the following:
    (a)    the general population prefers to keep its wealth in non-monetary assets or in a relatively stable foreign currency.  Amounts of local currency held are immediately invested to maintain purchasing power;
    (b)    the general population regards monetary amounts not in terms of the local currency but in terms of a relatively stable foreign currency.  Prices may be quoted in that currency;
    (c)    sales and purchases on credit take place at prices that compensate for the expected loss of purchasing power during the credit period, even if the period is short;
    (d)    interest rates, wages and prices are linked to a price index; and
    (e)    the cumulative inflation rate over three years is approaching, or exceeds, 100%.

    AASB 129.2-3

Definitions I

  • Term

    Definition

    Standard

    impairment loss

    The amount by which the carrying amount of an asset exceeds its recoverable amount.

    AASB 116.6, AASB 136.6, AASB 138.8

    impracticable

    Applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort to do so.

    AASB 101.11

     

    Applying a requirement is impracticable when the entity cannot apply it after making every reasonable effort to do so.  For a particular prior period, it is impracticable to apply a change in an accounting policy retrospectively or to make a retrospective restatement to correct an error if:
    (a)    the effects of the retrospective application or retrospective restatement are not determinable;
    (b)    the retrospective application or retrospective restatement requires assumptions about what management’s intent would have been in that period; or
    (c)    the retrospective application or retrospective restatement requires significant estimates of amounts and it is impossible to distinguish objectively information about those estimates that:
             (i)     provides evidence of          circumstances that existed on          the date(s) as at which those          amounts are to be recognised,          measured or disclosed; and
             (ii)    would have been available          when the financial report for          that prior period were          authorised for issue;

             from other information.

    AASB 108.5

    imputed rate of interest

    The more clearly determinable of either:
    (a)    the prevailing rate for a similar instrument of an issuer with a similar credit rating; or
    (b)    a rate of interest that discounts the nominal amount of the instrument to the current cash sales price of the goods or services.

    AASB 118.11

    inception of a lease

    The earlier of the date of the lease agreement and the date of commitment by the parties to the principal provisions of the lease.

    AASB 117.4

    income

    Increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants.

    F.70(a)

    incremental borrowing rate of interest (lessee’s)

    The rate of interest the lessee would have to pay on a similar lease or, if that is not determinable, the rate that, at the inception of the lease, the lessee would incur to borrow over a similar term, and with a similar security, the funds necessary to purchase the asset.

    AASB 117.4

    indirect method of reporting cash flows from operating activities

    Under this method, profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows.

    AASB 107.18(b)

    initial direct costs

    Incremental costs that are directly attributable to negotiating and arranging a lease, except for such costs incurred by manufacturer or dealer lessors.

    AASB 117.4

    insurance asset

    An insurer’s net contractual rights under an insurance contract.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    insurance contract

    A contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    insurance liability

    An insurer’s net contractual obligations under an insurance contract.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    insurance risk

    Risk, other than financial risk, transferred from the holder of a contract to the issuer.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    insured event

    An uncertain future event that is covered by an insurance contract and creates insurance risk.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    insurer

    The party that has an obligation under an insurance contract to compensate a policyholder if an insured event occurs.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    inwards reinsurance

    Reinsurance contracts written by reinsurers. 

    AASB 1023.19.1

    intangible asset

    An identifiable non-monetary asset without physical substance.

    AASB 138.8, AASB 3.A

    interest cost (for an employee benefit plan)

    The increase during a period in the present value of a defined benefit obligation which arises because the benefits are one period closer to settlement.

    AASB 119.7

    interest rate implicit in the lease

    The discount rate that, at the inception of the lease, causes the aggregate present value of (a) the minimum lease payments and (b) the unguaranteed residual value to be equal to the sum of (i) the fair value of the leased asset and (ii) any initial direct costs of the lessor.

    AASB 117.4

    interim financial report

    A financial report containing either a complete financial report (as described in AASB 101) or a condensed financial report (as described in AASB134) for an interim period.

    AASB 134.4

    interim period

    A reporting period shorter than a full annual reporting period.

    AASB 134.4

    International Financial Reporting Standards (IFRSs)

    Standards and Interpretations adopted by the International Accounting Standards Board (IASB) . They comprise:
    (a)    International Financial Reporting Standards;
    (b)    International Accounting Standards; and
    (c)    Interpretations originated by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC) .

    AASB 1.A, AASB 101.11, AASB 108.5

    intrinsic value

    The difference between the fair value of the shares to which the counterparty has the (conditional or unconditional) right to subscribe or which it has the right to receive, and the price (if any) the counterparty is (or will be) required to pay for those shares. For example, a share option with an exercise price of CU15, * on a share with a fair value of CU20, has an intrinsic value of CU5.

    * Monetary items are denominated in ‘currency units’ (CU)

    AASB 2.A

    inventories

    Assets:
    (a)    held for sale in the ordinary course of business;
    (b)    in the process of production for such sale; or
    (c)    in the form of materials or supplies to be consumed in the production process or in the rendering of services.

    AASB 102.6,

     

    Inventories encompass goods purchased and held for resale including, for example, merchandise purchased by a retailer and held for resale, or land and other property held for resale. Inventories also encompass finished goods produced, or work in progress being produced, by the entity and include materials and supplies awaiting use in the production process. In the case of a service provider, inventories include the costs of the service, as described in paragraph 19, for which the entity has not yet recognised the related revenue (see AASB 118 Revenue) .

    AASB 102.8

    inventories held for distribution

    Assets:
    (a)    held for distribution at no or nominal consideration in the        ordinary course of operations;
    (b)    in the process of production for          distribution at no or nominal          consideration in the ordinary          course     of operations; or
    (c)    in the form of materials or supplies to be consumed in the production process or in the rendering of services at no or nominal consideration.

    AASB 102.Aus6.1

    investing activities

    The acquisition and disposal of long-term assets and other investments not included in cash equivalents.

    AASB 107.6

    investment-linked

    Where the benefit amount under a life insurance contract or life investment contract is directly linked to the market value of the investments held in the particular investment-linked fund.

    AASB 1038.20.1

    investment property

    Property (land or a building – or part of a building – or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for:
    (a)    use in the production or supply of goods or services or for administrative purposes; or
    (b)    sale in the ordinary course of business.

    AASB 140.5

    investor in a joint venture

    A party to a joint venture and does not have joint control over that joint venture.

    AASB 131.3

Definitions J

  • Term

    Definition

    Standard

    Joint control

    The contractually agreed sharing of control over an economic activity.

    AASB 124.9

     

    Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic and operating decisions relating to the activity require the unanimous consent of the parties sharing control (the venturers) .

    AASB 128.2, AASB 131.3

    joint venture

    A contractual arrangement whereby two or more parties undertake an economic activity which is subject to joint control.

    AASB 131.3 AASB 3.A

    jointly controlled entity

    A joint venture that involves the establishment of a corporation, partnership or other entity in which each venturer has an interest.  The entity operates in the same way as other entities, except that a contractual arrangement between the venturers establishes joint control over the economic activity of the entity.

    AASB 131.24

Definitions K

  • Term

    Definition

    Standard

    key management personnel

    Those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.

    AASB 124.9

Definitions L

  • Term

    Definition

    Standard

    land under roads

    Land under roadways, and road reserves (including land under footpaths, nature strips and median strips) .

    AAS 27.12   AAS 29.17.1

    lease

    An agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time.

    AASB 117.4

    lease term

    The non-cancellable period for which the lessee has contracted to lease the asset together with any further terms for which the lessee has the option to continue to lease the asset, with or without further payment, when at the inception of the lease it is reasonably certain that the lessee will exercise.

    AASB 117.4

    legal obligation

    An obligation that derives from:
    (a)    a contract (through its explicit or implicit terms) ;
    (b)    legislation; or
    (c)    other operation of law.

    AASB 137.10

    lessee’s incremental borrowing rate of interest

    The rate of interest the lessee would have to pay on a similar lease or, if that is not determinable, the rate that, at the inception of the lease, the lessee would incur to borrow over a similar term, and with a similar security, the funds necessary to purchase the asset.

    AASB 117.4

    liability

    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 resources embodying economic benefits.

    AASB 137.10, F.49(b)

     

    The future sacrifice of economic benefits that the entity is presently obliged to make to other entities as a result of past transactions or other past events.

    AAS 27.12,  AAS 29.17.1, AAS 31.22.1

    liability adequacy test

    An assessment of whether the carrying amount of an insurance liability needs to be increased (or the carrying amount of related deferred acquisition costs or related intangible assets decreased) , based on a review of future cash flows.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    life insurance business

    All life insurance contract and life investment contract business conducted by a life insurer.

    AASB 1038.20.1

    life insurance contract

    An insurance contract, or a financial instrument with a discretionary participation feature, regulated under the Life Insurance Act 1995, and similar contracts issued by entities operating outside Australia.

    (Private health insurance contracts issued under the National Health Act 1953 but written by friendly societies registered under the Life Insurance Act, are not life insurance contracts but are general insurance contracts.)

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    life insurance liability

    A life insurer’s net contractual obligations under a life insurance contract.

    AASB 1038.20.1

    life insurer

    An entity registered under the Life Insurance Act 1995, that issues life insurance contracts or life investment contracts, and similar entities operating outside Australia.

    AASB 1038.20.1

    life investment contract

    A contract which is regulated under the Life Insurance Act 1995 but which does not meet the definition of a life insurance contract in this Standard, and similar contracts issued by entities operating outside Australia.

    AASB 1038.20.1

    life investment contract liability

    A life insurer’s net contractual obligations under a life investment contract which arise under the financial instrument component of a life investment contract.

    AASB 1038.20.1

    life reinsurance contract

    A life insurance contract issued by one insurer (the reinsurer) to compensate another insurer (the cedant) for losses on one or more contracts issued by the cedant.

    AASB 1023.19.1, AASB 1038.20.1

    liquidity

    The availability of sufficient funds to meet deposit withdrawals and other financial commitments as they fall due.

    AASB 130.7, (F.16)

    liquidity risk

    The risk that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments.  Liquidity risk may result from an inability to sell a financial asset quickly at close to its fair value. 

    AASB 132.52(c)

    loans and receivables

    Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than:

    (a)    those that the entity intends to sell immediately or in the near term, which shall be classified as held for trading, and those that the entity upon initial recognition designates as at fair value through profit or loss;

    (b)    those that the entity upon initial recognition designates as available for sale; or

    (c)    those for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration, which shall be classified as available for sale.

    An interest acquired in a pool of assets that are not loans or receivables (for example, an interest in a mutual fund or a similar fund) is not a loan or receivable.

    AASB 139.9

    local government

    An entity comprising all entities controlled by a governing body elected or appointed pursuant to a Local Government Act or similar legislation.

    AAS 27.12

    long-term incentive plan

    Any plan or arrangement providing benefits, other than equity compensation, as an incentive for performance to occur over a period longer than one reporting period, whether such performance is measured by reference to the financial performance or share price of the reporting entity (or any of its subsidiaries) or any other measure.

    AASB 1046.12.1

    losses

    Decreases in economic benefits and as such they are no different in nature from other expenses.

    F.79

     

Definitions M

  • Term

    Definition

    Standard

    market condition

    A condition upon which the exercise price, vesting or exercisability of an equity instrument depends that is related to the market price of the entity’s equity instruments, such as attaining a specified share price or a specified amount of intrinsic value of a share option, or achieving a specified target that is based on the market price of the entity’s equity instruments relative to an index of market prices of equity instruments of other entities.

    AASB 2.A, AASB 1046.12.1, AASB 1046A.3.1

    market risk

    Market risk includes three types of risk*. Market risk embodies not only the potential for loss but also the potential for gain.

    * Currency risk, fair value interest rate risk, price risk.  See respective definitions.

    AASB 132.52(a)

    master netting arrangement

    An arrangement providing for an entity that undertakes a number of financial instrument transactions with a single counterparty to make a single net settlement of all financial instruments covered by the agreement in the event of default on, or termination of, any one contract.

    AASB 132.50

    matching of costs with revenues

    Expenses are recognised in the income statement 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 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 of users taken on the basis of the financial report. 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.

    AASB 101.11, AASB 108.5 AASB 1031.A

    materiality

    Information is material if its non-disclosure could influence the economic decisions of users taken on the basis of the financial report.

    F.30

    measurement

    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.

    F.99

    measurement date

    The date at which the fair value of the equity instruments granted is measured for the purposes of this Standard. 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.

    AASB 2.A

    members

    Those persons in respect of whom contributions are made, or have been made, under the terms of a superannuation plan, and who, as a consequence, expect to receive benefits from the plan.

    AAS 25.10

    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.

    However, if the lessee has an option to purchase the asset at a price that is expected to be sufficiently lower than fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised, the minimum lease payments comprise the minimum payments payable over the lease term to the expected date of exercise of this purchase option and the payment required to exercise it.

    AASB 117.4

    minority interest

    That portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent.

    AASB 127.4, AASB 3.A

    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.

    AASB 121.8, (AASB 129.12) ,  (AASB 138.8)

    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. 

    AASB 119.7

    mutual entity

    An entity other than an investor-owned entity, such as a mutual insurance company or a mutual cooperative entity, that provides lower costs or other economic benefits directly and proportionately to its policyholders or participants.

    AASB 3.A

      

Definitions N

  • Term

    Definition

    Standard

    net claims incurred

    Direct claims costs net of reinsurance and other recoveries, and indirect claims handling costs, determined on a discounted basis.

    AASB 1023.19.1

    net investment in a foreign operation

    The amount of the reporting entity’s interest in the net assets of that operation.

    AASB 121.8

    net investment in the lease

    The gross investment in the lease discounted at the interest rate implicit in the lease.

    AASB 117.4

    net market value

    The amount which could be expected to be received from the disposal of an asset in an orderly market after deducting costs expected to be incurred in realising the proceeds of such a disposal.

    AAS 25.10

    net realisable 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.

    AASB 102.6

     

    Net realisable value refers to the net amount that an entity expects to realise 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 realisable value for inventories may not equal fair value less costs to sell.

    AASB 102.7

    neutrality

    Freedom from bias of the information contained in financial reports.

    F.36

    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 an additional amount such that, at inception, continuation of the lease is reasonably certain.

    AASB 117.4

    non-current asset

    An asset that does not meet the definition of a current asset.

    AASB 5.A

    non-insurance contract

    A contract regulated under the Insurance Act 1973, and similar contracts issued by entities operating outside Australia, which fails to meet the definition of an insurance contract under this Standard.

    (An example of a non-insurance contract might be a type of complex financial reinsurance contract.) 

    AASB 1023.19.1

    non-investment-linked business

    Life insurance business other than investment-linked business.

    AASB 1038.20.1

    non-reciprocal transfer

    A transfer in which the entity receives assets or services or has liabilities extinguished without directly giving approximately equal value in exchange to the other party or parties to the transfer.

    AASB 1004.A, AAS 27.12,  AAS 29.17.1, AAS 31.22.1

    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.

    AASB 102.13

    notes

    Notes contain information in addition to that presented in the balance sheet, income statement, statement of changes in equity and cash flow statement. Notes provide narrative descriptions or disaggregations of items disclosed in those statements and information about items that do not qualify for recognition in those statements.

    AASB 101.11

    not-for-profit entity

    An entity whose principal objective is not the generation of profit.  A not-for-profit entity can be a single entity or a group of entities comprising the parent and each of the entities that it controls.

    AASB 102.Aus6.1, AASB 114.Aus8.1, AASB 116.Aus6.1, AASB 136.Aus6.2

Definitions O

  • Term

    Definition

    Standard

    obligating event

    An event that creates a legal or constructive obligation that results in an entity having no realistic alternative to settling that obligation.

    AASB 137.10

    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

    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.

    AASB 137.10

    opening Australian-equivalents-to-IFRSs balance sheet

    An entity’s balance sheet (published or unpublished) at the date of transition to Australian equivalents to IFRSs.

    AASB 1.A

    operating activities

    The principal revenue-producing activities of an entity and other activities that are not investing or financing activities.

    AASB 107.6, AASB 114.8

    operating cycle

    The time between the acquisition of assets for processing and their realisation in cash or cash equivalents.

    AASB 101.59

    operating lease

    A lease other than a finance lease.

    AASB 117.4

    options, warrants and their equivalents

    Financial instruments that give the holder the right to purchase ordinary shares.

    AASB 133.5

    ordinary share

    An equity instrument that is subordinate to all other classes of equity instruments. 

    AASB 133.5

    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.

    AASB 119.7

    outside equity interest

    The equity in the economic entity other than that which can be attributed to the ownership group of the parent entity.

    AAS 31.22.1

    outstanding claims liability

    All unpaid claims and related claims handling expenses relating to claims incurred prior to the reporting date.

    AASB 1023.19.1

    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.

    AASB 140.5

    ownership group

    The group comprising those parties with a financial interest in the net assets of the entity which have obtained that interest by contributing future economic benefits to the entity in the form of contributions by owners or by acquiring the interest, established at an earlier time as a result of contributions by owners, from another party.

    AAS 31.22.1

    ownership interest

    The percentage of capital of an entity held, whether such capital is held directly or indirectly.

    AAS 22.13

Definitions P

  • Term

    Definition

    Standard

    parent

    An entity that has one or more subsidiaries.

    AASB 127.4, AASB 3.A

    parent entity

    An entity which controls another entity.

    AASB 1046.12.1, AAS 22.13,   AAS 29.17.1, AAS 31.22.1

    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) .

    AASB 119.7

    percentage of completion method

    A method by which 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.

    AASB 111.25

    performance

    The relationship of the income and expenses of an entity, as reported in the income statement.

    F.47

     

    The proficiency of a reporting entity in acquiring resources economically and using those resources efficiently and effectively in achieving specified objectives.

    SAC 2.5

    personally-related entities

    In relation to a particular individual, the relatives of the individual, the spouses of the relatives and any other entity under the joint or several control or significant influence of the individual, relatives of the individual or spouses of relatives.

    AASB 1046.12.1

    plan assets (of an employee benefit plan)

    (a)    assets held by a long-term employee          benefit fund; and
    (b)    qualifying insurance policies.

    AASB 119.7

    policyholder

    A party that has a right to compensation under an insurance contract if an insured event occurs.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    policy liability

    A liability that arises under a life insurance contract or a life investment contract including any asset or liability arising in respect of the management services element of a life investment contract.

    AASB 1038.20.1

    post-employment benefits

    Employee benefits (other than termination benefits) which are payable after the completion of employment.

    AASB 119.7

     

    Employee benefits (other than termination benefits and share-based payment compensation) that are payable after the completion of employment.

    AASB 1046.12.1

    post-employment benefit plans

    Formal or informal arrangements under which an entity provides post-employment benefits for one or more employees.

    AASB 119.7

    potential ordinary share

    A financial instrument or other contract that may entitle its holder to ordinary shares.

    AASB 133.5

    premium

    The amount charged in relation to accepting risk from the insured, but does not include amounts collected on behalf of third parties.

    AASB 1023.19.1

    prescribed benefit

    A benefit specified in the Corporations Act as requiring the approval of the shareholders or members of the corporate entity.

    AASB 1046.12.1

    presentation currency

    The currency in which the financial report is presented.  

    AASB 121.8

    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)

    previous GAAP

    The basis of accounting that a first-time adopter used immediately before adopting Australian equivalents to IFRSs.

    AASB 1.A

    price risk

    A market risk – The risk that the value of a financial instrument will fluctuate as a result of changes in market prices whether those changes are caused by factors specific to the individual instrument or its issuer or factors affecting all securities traded in the market.

    AASB 132.52(a) (iii)

    primary financial instruments

    Financial instruments such as receivables, payables and equity securities, that are not derivative financial instruments.

    AASB 132.AG15

    prior period errors

    Omissions from, and misstatements in, the entity’s financial report for one or more prior periods arising from a failure to use, or misuse of, reliable information that:
    (a)    was available when financial report    for those periods were authorised for    issue; and
    (b)    could reasonably be expected to have    been obtained and taken into account    in the preparation and presentation of    those financial report.

    Such errors include the effects of mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud.

    AASB 108.5

    probable

    More likely than not.

    AASB 3.A, AASB 5.A

    profit

    The residual amount that remains after expenses (including capital maintenance adjustments, where appropriate) have been deducted from income.  Any amount over and above that required to maintain the capital at the beginning of the period is profit.

    F.105,          F.107

    projected unit credit method

    An actuarial valuation method that sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation (sometimes known as the accrued benefit method pro-rated on service or as the benefit/years of service method) .

    AASB 119.64-66

    property, plant and equipment

    Are tangible items that:
    (a)    are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
    (b)    are expected to be used during more than one period.

    AASB 116.6

    prospective application

    Prospective application of a change in accounting policy and of recognising the effect of a change in an accounting estimate, respectively, are:
    (a)    applying the new accounting policy to transactions, other events and conditions occurring after the date as at which the policy is changed; and
    (b)    recognising the effect of the change in the accounting estimate in the current and future periods affected by the change.

    AASB 108.5

    provision

    A liability of uncertain timing or amount.

    AASB 137.10

    prudence

    The inclusion of a degree of caution in the exercise of the judgements needed in making the estimates required under conditions of uncertainty, such that assets or income are not overstated and liabilities or expenses are not understated.

    F.37

    purchase consideration

    The fair value of assets given or share capital issued, liabilities undertaken, and/or other securities given by the acquiring entity, in exchange for assets (net, where applicable) or shares of another entity.

    AAS 31.22.1

    put options (on ordinary shares)

    Contracts that give the holder the right to sell ordinary shares at a specified price for a given period.

    AASB 133.5

Definitions Q

  • Term

    Definition

    Standard

    qualifying assets

    An asset that necessarily takes a substantial period of time to get ready for its intended use or sale.

    AASB 123.4

    qualifying insurance policy

    An insurance policy issued by an insurer that is not a related party (as defined in AASB 124 Related Party Disclosures) of the reporting entity, if the proceeds of the policy:
    (a)    can be used only to pay or fund employee benefits under a defined benefit plan; and
    (b)    are not available to the reporting entity’s own creditors (even in bankruptcy) and cannot be paid to the reporting entity, unless either:
             (i)     the proceeds represent surplus          assets that are not needed for          the policy to meet all the related          employee benefit obligations; or
             (ii)    the proceeds are returned to the          reporting entity to reimburse it          for employee benefits already          paid.

    AASB 119.7

Definitions R

  • Term

    Definition

    Standard

    realisable value

    The amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal. 

    F .100(c)

    reciprocal transfer

    A transfer in which the entity receives assets or services or has liabilities extinguished and directly gives approximately equal value in exchange to the other party or parties to the transfer.

    AAS 31.22.1

    recognised

    Reported on, or incorporated in amounts reported on, the face of the profit and loss or other operating statement or of the statement of financial position (whether or not further disclosure of the item is made in notes thereto) .

    AAS 22.13,  (AAS 27.12) ,  (AAS 29.17.1) , (AAS 31.22.1)

    recognition

    The process of incorporating in the balance sheet or income statement an item that meets the definition of an element and satisfies the following criteria for recognition:
    (a)    it is probable that any future economic benefit associated with the item will flow to or from the entity; and
    (b)    the item has a cost or value that can be measured with reliability.

    F.82               F.83

    reconstruction within a reporting entity

    A business combination in which:
    (a)        control of a group of assets comprising a business is transferred from one entity in a reporting entity (the vendor entity) to another entity in the same reporting entity (the acquirer) ; or
    (b)        the direct ownership interests in the ultimate parent entity of a reporting entity held by each of the owners of that parent entity are transferred to a newly-formed entity (the acquirer) ;

    and in which the acquirer only issues its own equity instruments as purchase consideration, and the ultimate owners and the relative ownership interests of the ultimate owners of the transferred business remain unchanged as a result of the business combination.

    AASB 3.A

    recoverable amount

    The higher of an asset’s (or cash-generating unit’s) fair value less costs to sell and its value in use.

    AASB 136.6, AASB 5.A (AASB 116.6)

    regular way purchase or sale

    A purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

    AASB 139.9

    reinsurance

    The party that has an obligation under a reinsurance contract to compensate a cedant if an insured event occurs.

    AASB 4.A

    reinsurance assets

    A cedant’s net contractual rights under a reinsurance contract.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    reinsurance contract

    An insurance contract issued by one insurer (the reinsurer) to compensate another insurer (the cedant) for losses on one or more contracts issued by the cedant.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    reinsurer

    The party that has an obligation under a reinsurance contract to compensate a cedant if an insured event occurs.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    related party

    A party is related to an entity if:
    (a)    directly, or indirectly through one or more intermediaries, the party:
             (i)     controls, is controlled by, or is          under common control with, the          entity (this includes parents,          subsidiaries and fellow          subsidiaries) ;
             (ii)    has an interest in the entity that          gives it significant influence          over the entity; or
             (iii)  has joint control over the entity;
    (b)    the party is an associate (as defined in AASB 128 Investments in Associates) of the entity;
    (c)    the party is a joint venture in which the entity is a venturer (see AASB 131 Interests in Joint Ventures) ;
    (d)    the party is a member of the key management personnel of the entity or its parent;
    (e)    the party is a close member of the family of any individual referred to in (a) or (d) ;
    (f)     the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e) ; or
    (g)    the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity.

    In relation to an entity:
    (a)    any other entity that, at any time during the reporting period, has control or significant influence over the entity;
    (b)    any other entity that, at any time during the reporting period, is subject to control or significant influence by the entity
    (c)    any other entity that, at any time during the reporting period, is controlled by the same entity that controls the entity — referred to as a situation in which entities are subject to common control;
    (d)    any other entity that, at any time during the reporting period, is controlled by the same entity that significantly influences the entity;
    (e)    any other entity that, at any time during the reporting period, is significantly influenced by the same entity that controls the entity;
    (f)     any director of the entity or any of their director related entities; or
    (g)    any director of any other entity identified as a related party under any of paragraphs (a) to (e) , or any of their director-related entities;

    but excludes any other entity (except those identified as a related party under paragraph
    (f) ) where the related party relationship results solely from normal dealings of:+
    (h)    financial institutions;
    (i)     authorised trustee corporations;
    (j)     fund managers;
    (k)    trade unions;
    (l)     statutory authorities;
    (m)   government departments; or
    (n)    local governments.

    AASB 124.9

    AAS 22.13

    related party transaction

    A transfer of resources, services or obligations between related parties, regardless of whether a price is charged.

    AASB 124.9

    related practice

    In relation to the auditor’s practice:
    (a)    an entity through which an auditor provides professional services to clients and that has one or more partners or directors in common with the auditor’s practice; or
    (b)    an entity that is owned by the relatives of one or more partners of the auditor’s practice and that shares fees or profits with the auditor’s practice in respect of the entity that is subject to the financial reporting obligation; or
    (c)    any other entity that shares fees or          profits with the auditor’s practice in          respect of the entity that is subject to          the financial reporting obligation.

    AASB 101.Aus11.1

    relative

    In relation to a person, the spouse, parent or remoter lineal ancestor, son, daughter or remoter issue, or brother or sister of the person.

    AAS 22.13, AASB 1046.12.1

    relevance

    Information has the quality of relevance when it influences the economic decisions of users by helping them evaluate past, present or future events or confirming, or correcting, their past evaluations.

    Means that quality of financial information which exists when that information influences decisions by users about the allocation of scarce resources by:
    (a)    helping them form predictions about the outcomes of past, present or future events; and/or
    (b)    confirming or correcting their past evaluations;

    and which enables users to assess the rendering of accountability by preparers.

    F.26

    AAS 31.22.1

    reliability

    Information has the quality of reliability when it is free from material error and bias and can be depended upon by users to represent faithfully that which it either purports to represent or could reasonably be expected to represent.

    Means that quality of financial information which exists when that information can be depended upon to represent faithfully, and without bias or undue error, the transactions or events that either it purports to represent or could reasonably be expected to represent.

    F.31

    AAS 31.22.1

    reload feature

    A feature that provides for an automatic grant of additional share options whenever the option holder exercises previously granted options using the entity’s shares, rather than cash, to satisfy the exercise price.

    AASB 2.A

    reload option

    A new share option granted when a share is used to satisfy the exercise price of a previous share option.

    AASB 2.A

    reportable segment

    A business segment or a geographical segment for which segment information is required to be disclosed. 

    AASB 114.9

    reporting date

    The end of the latest period covered by a financial report or by an interim financial report.

    AASB 1.A

     

    The end of the reporting period to which the financial report relates.

    AAS 22.13,  AAS 25.10,  AAS 29.17.1

    reporting entity

    An entity in respect of which it is reasonable to expect the existence of users who rely on the entity’s general purpose financial report for information that will be useful to them for making and evaluating decisions about the allocation of resources. A reporting entity can be a single entity or a group comprising a parent and all of its subsidiaries.

    AASB 3.A   

     

    An entity (including an economic entity) in respect of which it is reasonable to expect the existence of users dependent on general purpose financial reports for information which will be useful to them for making and evaluating decisions about the allocation of scarce resources.

    AAS 22.13,   AAS 25.10,   AAS 27.12,     AAS 29.17.1,     AAS 31.22.1, SAC 2.5

    repricing

    In relation to options or rights means any change to the terms or conditions of an option or right over shares or units that benefits the holder.

    AASB 1046.12.1

    research

    Original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.

    AASB 138.8

    residual value

    The net amount which an entity expects to obtain for an asset at the end of its useful life after deducting the expected costs of disposal.

    AASB 116.6

    residual value (of an intangible asset)

    The estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

    AASB 116.6, AASB 138.8

    restructuring

    A programme that is planned and controlled by management, and materially changes either:
    (a)    the scope of a business undertaken by an entity; or
    (b)    the manner in which that business is conducted.

    AASB 137.10

    retirement

    Cessation of employment and includes loss of office, resignation and death at the time of holding that office.

    AASB 1046.12.1 (AAS 22.13)

    retirement benefits

    Post-employment benefits other than pension, superannuation and termination benefits and includes prescribed benefits as well as benefits which, if earned progressively over the period of employment, are recognised on an accrual basis.

    AASB 1046.12.1

    retrospective application

    Applying a new accounting policy to transactions, other events and conditions as if that policy had always been applied.

    AASB 108.5

    retrospective restatement

    Correcting the recognition, measurement and disclosure of amounts of elements of financial statements as if a prior period error had never occurred.

    AASB 108.5

    return on plan assets (of an employee benefit plan)

    Interest, dividends and other revenue derived from the plan assets, together with realised and unrealised gains or losses on the plan assets, less any costs of administering the plan and less any tax payable by the plan itself.

    AASB 119.7

    revaluation

    Restatement of assets and liabilities.

    F.81

    revalued amount of an asset

    The fair value of an asset at the date of a revaluation less any subsequent accumulated depreciation and accumulated impairment losses.

    AASB 116.31

    revenue

    The gross inflow of economic benefits during the period arising in the course of the ordinary activities of an entity when those inflows result in increases in equity, other than increases relating to contributions from equity participants.

    AASB 118.7, AASB 114.8

     

    Inflows or other enhancements, or savings in outflows, of future economic benefits in the form of increases in assets or reductions in liabilities of the entity, other than those relating to contributions by owners, that result in an increase in equity during the reporting period.

    AAS 27.12,  AAS 29.17.1, AAS 31.22.1

    reverse acquisition

    An acquisition where the acquirer is the entity whose equity interests have been acquired and the issuing entity is the acquiree. This might be the case when, for example, a private entity arranges to have itself ‘acquired’ by a smaller public entity as a means of obtaining a stock exchange listing.

    AASB 3.21

    rewards associated with a leased asset

    Rewards may be represented by the expectation of profitable operation over the asset’s economic life and of gain from appreciation in value or realisation of a residual value.

    AASB 117.7

    risks associated with a leased asset

    Risks include possibilities of losses from idle capacity or technological obsolescence and of variations in return due to changing economic conditions.

    AASB 117.7

Definitions S

  • Term

    Definition

    Standard

    sale and leaseback transaction

    The sale of an asset and the leasing back of the same asset. The lease payment and the sale price are usually interdependent because they are negotiated as a package.

    AASB 117.58

    segment accounting policies

    The accounting policies adopted for preparing and presenting the financial reports of the consolidated group or entity as well as those accounting policies that relate specifically to segment reporting.

    AASB 114.16

    segment assets

    Those operating assets that are employed by a segment in its operating activities and that either are directly attributable to the segment or can be allocated to the segment on a reasonable basis.  

    AASB 114.16

    segment expense

    Expense resulting from the operating activities of a segment that is directly attributable to the segment and the relevant portion of an expense that can be allocated on a reasonable basis to the segment, including expenses relating to sales to external customers and expenses relating to transactions with other segments of the same entity. 

    AASB 114.16

    segment liabilities

    Those operating liabilities that result from the operating activities of a segment and that either are directly attributable to the segment or can be allocated to the segment on a reasonable basis. 

    If a segment’s segment result includes interest expense, its segment liabilities include the related interest-bearing liabilities.

    AASB 114.16

    segment result

    Segment revenue less segment expense.  Segment result is determined before any adjustments for minority interest.

    AASB 114.16

    segment revenue

    Revenue reported in the entity’s income statement that is directly attributable to a segment and the relevant portion of entity revenue that can be allocated on a reasonable basis to a segment, whether from sales to external customers or from transactions with other segments of the same entity.

    AASB 114.16

    separate financial statements

    Those presented by a parent in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees.

    AASB 127.4, AASB 128.2, AASB 131.3, AASB 1023.19.1, AASB 1038.20.1

    set-off, legal right of

    A debtor’s legal right, by contract or otherwise, to settle or otherwise eliminate all or a portion of an amount due to a creditor by applying against that amount an amount due from the creditor.

    AASB 132.40

    settlement (of employee benefit obligations)

    A transaction that eliminates all further legal or constructive obligation for part or all of the benefits provided under a defined benefit plan, for example, when a lump-sum cash payment is made to, or on behalf of, plan participants in exchange for their rights to receive specified post-employment benefits.

    AASB 119.112

    settlement date

    The date that a financial asset is delivered to the entity that purchased it.

    AASB 139.AG56

    settlement value

    The undiscounted amounts of cash or cash equivalents expected to be paid to satisfy the liabilities in the normal course of business.

    F.100(c)

    share-based payment arrangement

    An agreement between the entity and another party (including an employee) to enter into a share-based payment transaction, which thereby entitles the other party to receive cash or other assets of the entity for amounts that are based on the price of the entity’s shares or other equity instruments of the entity, or to receive equity instruments of the entity, provided the specified vesting conditions, if any, are met.

    AASB 2.A

    share-based payment compensation

    Means, in respect of employees, benefits in the form of:
    (a)    equity compensation; or
    (b)    rights to equity instruments that may, at the discretion of the employee, be settled either by cash payments or the issue of equity instruments of the entity required to prepare the financial report or any of its subsidiaries; or
    (c)    other compensation, the amount of which depends on the future value of the equity instruments of the entity required to prepare the financial report or any of its subsidiaries.

    AASB 1046.12.1

    share-based payment transaction

    A transaction in which the entity receives goods or services as consideration for equity instruments of the entity (including shares or share options) , or acquires goods or services by incurring liabilities to the supplier of those goods or services for amounts that are based on the price of the entity’s shares or other equity instruments of the entity.

    AASB 2.A

    share option

    A contract that gives the holder the right, but not the obligation, to subscribe to the entity’s shares at a fixed or determinable price for a specific period of time.

    AASB 2.A

    short seller

    An entity that sells securities that it has borrowed and does not yet own.

    AASB 139.AG15

    short-term employee benefits

    Employee benefits (other than termination benefits) which fall due wholly within twelve months after the end of the period in which the employees render the related service.

    AASB 119.7

    significant influence

    Significant influence is the power to participate in the financial and operating policy decisions of an entity, but is not control over those policies. (Significant influence may be gained by share ownership, statute or agreement.)

    AASB 128.2, AASB 131.3, (AASB 124.9) , (AAS 22.13)

    solvency

    The availability of cash over the longer term to meet financial commitments as they fall due.

    F.16

    special purpose financial report

    A financial report other than a general purpose financial report.

    AASB 101.Aus11.1

    specified director

    A person who was, at any time during the reporting period, a director of the entity required to prepare the financial report.

    AASB 1046.12.1, AASB 124.Aus9.1

    specified executive

    Means one of the five or more executives who:
    (a)    have the greatest authority for managing the consolidated group or, where there are no subsidiaries, the entity required to prepare the financial report;
    (b)    are employed at any time during the reporting period by the entity or any of its subsidiaries; and
    (c)    are not specified directors.

    AASB 1046.12.1, AASB 124.Aus9.1

    spot exchange rate

    The exchange rate for immediate delivery.

    AASB 121.8

    state (employee benefit) plan

    Employee benefit plans established by legislation to cover all entities (or all entities in a particular category, for example a specific industry) and operated by national or local government or by another body (for example an autonomous agency created specifically for this purpose) which is not subject to control or influence by the reporting entity.

    AASB 119.37

    statutory fund

    A statutory fund under the Life Insurance Act 1995.

    AASB 1038.20.1

    subsidiary

    An entity, including an unincorporated entity such as a partnership, that is controlled by another entity (known as the parent) .

    AASB 3.A, AASB 127.4, AASB 128.2 (AASB 1046.12.1) ,  (AAS 29.17.1)

    substance over form

    The principle that transactions and other events are  accounted for and presented in accordance with their substance and economic reality and not merely their legal form.

    F.35 (AASB 108.7-10)

    superannuation plan

    An arrangement whereby it is agreed, between trustees and employers, employees or self employed persons, that benefits be provided upon the retirement of plan members or upon their resignation, death, disablement or other specified event(s) .

    AAS 25.10

Definitions T

  • Term

    Definition

    Standard

    tax base of an asset or liability

    The amount attributed to that asset or liability for tax purposes.

    AASB 112.5

    tax expense (tax income)

    The aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.  Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax expense (deferred tax income) .

    AASB 112.5, AASB 112.6

    taxable profit (tax loss)

    The profit (loss) for a period, determined in accordance with the rules established by the taxation authorities, upon which income taxes are payable (recoverable) .

    AASB 112.5

    taxable temporary difference

    A temporary difference that will result in taxable amounts in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled.

    AASB 112.5

    temporary difference

    A difference between the carrying amount of an asset or liability in the balance sheet and its tax base.  A temporary difference may be either:
    (a)    a taxable temporary difference;  or
    (b)    a deductible temporary difference.

    AASB 112.5

    termination benefits

    Employee benefits payable as a result of either:
    (a)    an entity’s decision to terminate an employee’s employment before the normal retirement date; or
    (b)    an employee’s decision to accept voluntary redundancy in exchange for those benefits.

    AASB 119.7, AASB 1046.12.1

    trade date

    The date that an entity commits itself to purchase or sell an asset.

    AASB 139.AG55

    transaction costs (financial instruments)

    Incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or liability (see AASB 139 Appendix A paragraph AG13) .  An incremental cost is one that would not have been incurred if the entity had not acquired, issued or disposed of the financial instrument.

    AASB 139.9

    transitional liability (defined benefit plans)

    The following total:
    (a)    the present value of the obligation at the date of adopting AASB 119 (revised) ;
    (b)    minus the fair value, at the date of adoption, of plan assets (if any) out of which the obligations are to be settled directly;
    (c)    minus any past service cost that shall be recognised in later periods.

    AASB 119.154

Definitions U

  • unbundle

    Account for the components of a contract as if they were separate contracts.

    AASB 4.A, AASB 1023.19.1, AASB 1038.20.1

    understandability

    Information provided in financial reports has the quality of understandability when is comprehensible to users who have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence.

    Means that quality of financial information which exists when users of that information are able to comprehend its meaning.

    F.25

    AAS 29.17.1

    unearned finance income

    The difference between:
    (a)    the gross investment in the lease, and
    (b)    the net investment in the lease.

    AASB 117.4

    unguaranteed residual value

    That portion of the residual value of the leased asset, the realisation of which by the lessor is not assured or is guaranteed solely by a party related to the lessor.

    AASB 117.4

    useful life

    The estimated remaining period, from the commencement of the lease term, without limitation by the lease term, over which the economic benefits embodied in the asset are expected to be consumed by the entity.

    AASB 117.4

     

    Either:
    (a)    the period over which an asset is expected to be available for use by an entity; or
    (b)    the number of production or similar units expected to be obtained from the asset by the entity.

    AASB 116.6, AASB 136.6, AASB 138.8

Definitions V

  • Term

    Definition

    Standard

    value in use

    The present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

    AASB 5.A (AASB 136.6)

    variable production overheads

    Those indirect costs of production that vary directly, or nearly directly, with the volume of production, such as indirect materials and indirect labour.

    AASB 102.12

    venturer

    A party to a joint venture that has joint control over that joint venture.

    AASB 131.3

    vest

    To become an entitlement.  Under share-based payment arrangement, a counterparty’s right to receive cash, other assets, or equity instruments of the entity vests upon satisfaction of any specified vesting conditions.

    AASB 2.A

    vested benefits

    Benefits, the members’ rights to which, under the terms of a superannuation plan, are not conditional upon continued plan membership or any factor other than resignation from the plan.

    AAS 25.10

    vested employee benefits

    Employee benefits that are not conditional on future employment.

    AASB 119.7

    vesting conditions

    The conditions that must be satisfied for the counterparty to become entitled to receive cash, other assets or equity instruments of the entity, under a share-based payment arrangement. Vesting conditions include service conditions, which require the other party to complete a specified period of service, and performance conditions, which require specified performance targets to be met (such as a specified increase in the entity’s profit over a specified period of time) .

    AASB 2.A

    vesting date

    The date on which are satisfied the conditions precedent to an employee becoming beneficially entitled to the equity instrument or other bonus.

    AASB 1046.12.1

    vesting period

    The period during which all the specified vesting conditions of a share-based payment arrangement are to be satisfied.

    AASB 2.A

     

Definitions W

  • Term

    Definition

    Standard

    warrant

    A financial instrument that gives the holder the right to purchase ordinary shares.

    AASB 133.5

    weather derivative

    A contract that requires payment based on climatic, geological or other physical variables.

    AASB 1023.19.1

    weighted average cost method

    Under this method, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period.  The average may be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances of the entity.

    AASB 102.27

    weighted average number of ordinary shares outstanding during the period

    Number of ordinary shares outstanding at the beginning of the period, adjusted by the number of ordinary shares bought back or issued during the period multiplied by a time-weighting factor.

    AASB 133.20

    wholly-owned group

    (a)    In relation to an entity which is a wholly-owned controlled entity, the group of entities comprising:
             (i)     the ultimate parent entity which          has an ownership interest of          100% in the entity; and
             (ii)    the wholly-owned controlled          entities of that parent entity; or
    (b)    in relation to an entity which is not a wholly-owned controlled entity, the group of entities comprising that entity and the wholly-owned controlled entities of that entity.

    AAS 22.13

Definitions X, Y & Z

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