Definitions
An asset is a present economic resource controlled by the entity as a result of past events.
An economic resource is a right that has the potential to produce economic benefits.
A liability is a present obligation of the entity to transfer an economic resource as a result of past events.
Income is increases in assets, or decreases in liabilities, that result in increases in equity, other than those relating to contributions from holders of equity claims.
The concept of income includes both revenue and gains.
Revenue is income arising in the course of the ordinary activities of the entity such as sales revenue and income from investments.
Gains include, for example, the gain on disposal of a non-current asset. They might arise in the normal course of business activities. They might be realised or unrealised. Unrealised gains occur whenever an asset is revalued upwards, such as the upward revaluation of marketable securities.
Expenses are decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims.

Appraisal of statement
‘Statement of financial position all that is required’
The statement of financial position does show the position of a business at a point in time (like a snapshot), but by itself is insufficient to give a comprehensive view of performance and/or adaptability.
The IASB Framework states that information on financial performance is provided by the statement of profit or loss and other comprehensive income. This is because the statement of financial position fails to give any account of transactions leading up to the statement of position.
It is the statement of profit or loss and other comprehensive income and the SOCIE that show the performance of a business in a given period and reconcile the opening and closing statements of financial position.
Information on financial adaptability is given primarily by the statement of cash flows. This is because financial adaptability is the ability to take effective action to alter the amount and timing of cash flows. Some information comes from the statement of financial position (e.g. the note about future lease commitments) but the statement of financial position is by no means ‘all that is required’.
‘Statement of profit or loss is a superfluous statement’
Although income (revenue and gains) and expenses (and losses) would be reflected in an increase/decrease in the assets and liabilities in the statement of financial position, the volume and type of income generated would give a better indication of company performance. It is the statement of profit or loss and other comprehensive income that provides such detailed information; without it the performance of the business cannot be properly evaluated.
Eduard Wolfe Global
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Institute of Chartered Accountants, Zamunda