The essential elements of Balance sheet:
1ASSET
2EQUITY
3LIABILITY
Recognition criteria of essential elements:
1:Asset
>A controlled Resource
>A result of a past event
>Expectations of future economic benefit
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 productive one that is part of the operating activities of the entity.
2:Liability
>A present obligation
>Arising from past event
>An outflow from the entity of resources embodying economic benefit.
Obligation:
A duty or responsibility to act or to perform in a certain way.Obligation may be legally enforceable as a consequence of a satutory requirement.
3:Equity
>The residual interest in the assets of the entity after deducting all its liabilities.(Assets - Liability =Equity)
The amount shown for equity depends on the measurement of assets and liabilities.