For an item to be recognized in the financial statement it should meet the defination and recognition criteria of either :
1. Asset
2. Liability
3. Equity
Defination and Recognition Criteria
Asset
Defination : An asset is an economic controlled by an entity as a result of a past events and from which future economic benefits are expected to flow to the entity.
Liability
Defination : A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.
Equity
Defination: Equity is the residual interest in the assets of the entity after deducting all its liabilities.
In conclusion
For an item to be recognized in the financial statements it should meet the defination and recognition criteria of either Asset, Liability or Equity
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