Offsetting
Offsetting presents an asset and liability, or income and expense, as a net amount. IFRS generally prohibits offsetting unless required or permitted by a standard; showing gross amounts usually conveys more useful information. Separate presentation allows users to see both the amount due from the customer and the amount owed to the supplier.
Worked example
A receivable of 900 and a payable of 500 are normally presented separately rather than as a net asset of 400.
Common mistake
Confusing a bookkeeping contra entry with permission to offset financial statement balances.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: net presentation