Crime Against Humanity: the Holy GAAP, 14

In both the assets and liabilities columns, the figures are not entered haphazardly, but grouped by categories. Assets are basically grouped by the degree they tie up the funds used: while funds are immediately recoverable from cash, they are more or less rapidly, easily and entirely recoverable from each of the various categories of assets mentioned above. Liabilities, on the other hand, are basically grouped in two categories of financers: those who own the entity and those who don’t. Indeed both assets and liabilities can be grouped in more articulated categories, but these are the basic. Profits and losses occurred during the specified period of time between the previous balance sheet and the current one become increases or decreases of the assets in the current balance sheet; as the totals of the two columns must be equal, the increase or decrease must be carried over into the liabilities column, which means the entity accounts for that to its financers, owners and non−owners, who see their capital invested increase or decrease.

Back to our investigation of the IAS/IFRS, another reason why it is relatively simple is that it is confined to money, hence the following is shortlisted to blaze a narrow trial within a possibly otherwise inextricable financial jungle.

These IAS/IFRS are identified by numbers, and our investigation leads us to IAS 39, Financial instruments: recognition and measurement. Bankers’ scriptural money is a financial instrument, and here’s where financial instruments are recognised as such and hence measured, in accounting and officially in the financial statement.
We are looking for definitions, so in IAS 39 we find “Definitions, paragraph 8”, which refers to IAS 32, paragraph 11: “8. The terms defined in IAS 32 are used in this standard with the meanings specified in paragraph 11 of IAS 32. IAS 32 defines the following terms: – financial instrument, – financial asset, – financial liability, […] and provides guidance on applying those definitions.”

Crime Against Humanity: the Holy GAAP