Only one constraint is pervasive: cost. Reporting information imposes costs on preparers and on users, and it is only justified if the benefits exceed them. Standard setters weigh it for the standard as a whole and not for each entity, so a rule that's expensive for one filer survives if it's cheap and valuable for most. Next time you wonder why a disclosure you want doesn't exist, the answer is usually that somebody scored its cost above its benefit. It's rarely that nobody thought of it.
How are the five elements defined?
The five elements are the building blocks, and the current definitions are tighter than the ones in circulation twenty years ago.
An asset is a present economic resource controlled by the entity as a result of past events, where an economic resource is a right that has the potential to produce economic benefits. Note what is absent: certainty. The potential need not be likely, so a lottery ticket is an asset, valued at very little. Note also what is present: control. That's what makes a leased aircraft an asset of the airline that flies it.
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A liability is a present obligation to transfer an economic resource as a result of past events. Three tests, all of which must hold: an obligation exists, it is to transfer an economic resource, and it arose from a past event.
A board decision to spend money next year fails the first test, so restructuring provisions turn on when the plan was announced.
Equity is the residual interest in the assets after deducting all the liabilities. It's defined by subtraction. It doesn't measure value, and it doesn't measure cash raised either.
Income is increases in assets or decreases in liabilities that result in increases in equity, other than contributions from equity holders. Expenses are the mirror. Both are defined off the balance sheet. If you keep one structural fact from the framework, keep this one: the income statement is derived from movements in assets and liabilities, not the other way round. So a revaluation increase is income in the broad sense even when it never appears in profit, and the fight over revaluation is a fight about presentation. Whether income arose isn't in question.
What are recognition and derecognition?
Recognition is a separate decision from definition. An item that meets a definition is recognised only if recognising it provides useful information, meaning relevant information about the asset or liability and a faithful representation of it, with the benefits exceeding the cost. Failing that test doesn't make the item vanish. It makes it a disclosure. Internally generated brands, most contingent assets and many contingent liabilities end up there. Reading the notes for them is a Phase 1 habit, and it pays for the rest of your career.
Derecognition is the removal of a recognised asset or liability, and it is the mechanism behind lessor accounting and debt extinguishment. An asset is derecognised when control is lost, and a liability when the obligation is discharged, cancelled or expires.
A lessor derecognising a machine, a company retiring a bond and an entity transferring a receivable are the same question asked three ways.