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IFRS Concepts of capital maintenance and the determination of profit?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Princy asked 12 months ago

IFRS Concepts of capital maintenance and the determination of profit?

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 vijay answered 12 months ago

The concepts of capital in give rise to the following two concepts of capital maintenance:

(a) Financial capital maintenance. Under this concept a profit is earned only if the financial (or money) amount of the net assets at the end of the period exceeds the financial (or money) amount of net assets at the beginning of the period, after excluding any distributions to, and contributions from, owners during the period. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power.

(b) Physical capital maintenance. Under this concept a profit is earned only if the physical productive capacity (or operating capability) of the entity (or the resources or funds needed to achieve that capacity) at the end of the period exceeds the physical productive capacity at the beginning of the period, after excluding any distributions to, and contributions from, owners during the period.

For more details on IFRS please read the following article-> IFRS Detail

For more details on IFRS ACCA please read the following article-> ACCA IFRS DETAILS

For fee related things pleases read the following article-> IFRS Fees

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