IFRS 8 reporting segments seeks to assist the user of financial statements gain a clearer understanding of the performance of the business by requiring disaggregation of the reported financial information into segments.
Under IASB conceptual framework for financial reporting, certain qualitative characteristics of useful financial information are identified. These are subdivided into characteristics considered fundamental and those considered to be enhancing. The two fundamental characteristics identified by framework are relevance and faithful representation. In order for financial transaction to be represented faithfully in the financial statements the principle of substance over form should be applied.This means that wherever there is difference between the legal form of transaction and its economic substance, the financial statements should reflect economic substance.It has been one of the failure of accounting regulation over the years that creative means of circumventing well meaning rules have been found. The result of such efforts have been the undermining of the faith in the ability of financial statement to reflect faithfully the truth and fairness of the performance and financial position of the reporting entity.It has become clear that any hard rule can be creatively circumvented by contriving transactions appropriately. This is because transaction are necessarily structured between parties as they wish, and to suit their business needs. Regulators can not anticipate the needs of transacting parties, and rules by their nature always lags behind the transactions themselves. In other words, as regulators see a transaction that is not covered by the existing rule, they seek to plug the gap. This is not a satisfactory way to ensure that financial statements reflect truth and fairness.
Contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by occurrence or non occurrence of one or more uncertain future events not wholly within the control of the entity. In other words contingent asset is asset whose timing or amount can not be reliably established.
Contingent liability is possible obligation that arises from past events and whose existence will be confirmed only by occurrence and non occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation that arise from past event but is not recognized because: