Section 21: Expenses (AASB 1061_04-26)

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. Expenses shall be recorded upon the recording of the decrease in assets or the increase in liabilities. Recording expenses is based on accrual accounting, where not all cash payments give rise to an expense (eg purchases of assets and settlements of liabilities paid for with cash, neither of which decreases equity), and some expenses arise in the absence of a cash payment (eg liabilities incurred to pay for employee services consumed, and using up of assets recorded as depreciation). The timing of the recording of various types of expenses is specified in other sections of this Standard.

Expenses may arise from amounts paid and payable by the entity with resources it controls. Amounts paid by the entity on behalf of another entity using resources controlled by that other entity are not expenses of the entity. Paragraphs 20.14–20.17 provide guidance on whether an entity is acting as an agent of another entity.