BC7 In developing recognition and measurement requirements for an entity’s opening IFRS balance sheet, the Board referred to the objective of financial statements, as set out in the Framework for the Preparation and Presentation of Financial Statements. The Framework [References to the Framework in this Basis for Conclusions are to the IASC’s Framework for the Preparation and Presentation of Financial Statements, adopted by the Board in 2001 and in effect when the Standard was developed.] states that the objective of financial statements is to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions.

BC8 The Framework identifies four qualitative characteristics that make information in financial statements useful to users. In summary, the information should be:

(a) readily understandable by users.

(b) relevant to the decision‑making needs of users.

 (c) reliable, in other words financial statements should:

(i) represent faithfully the transactions and other events they either purport to represent or could reasonably be expected to represent;

(ii) represent transactions and other events in accordance with their substance and economic reality and not merely their legal form;

(iii) be neutral, that is to say, free from bias;