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Seminar Outline
Full IFRS vs IFRS for SMEs
Accounting Framework and first-time adoption Financial Statements Income and Expenses Financial Assets & Liabilities Non-financial assets Non-financial liabilities and equity Other Topics
Scope
Measurement bases
FULL IFRS
Investment Property, biological assets and certain categories of financial instruments
Presents its first Presents its first annual FS that annual FS that conform with IFRS conform to IFRS. for SMEs regardless of whether its previous framework was full IFRS.
Date of transition
The beginning of the earliest period for which full comparative information is presented in accordance with IFRS for SMEs
Reconciliation required
Equity reported under its previous financial reporting framework to its equity under IFRS for SMEs for both the transition date and end of the latest period presented in the entitys most recent annual FS under its previous financial reporting framework Profit or loss reported under its previous financial reporting framework for the latest period in its most recent annual FS to its profit or loss under IFRS for SMEs for the same period.
Some optional exemptions from retrospective application (See IFRS FOR SMEs 35.10)
FV or revaluation as deemed cost for PPE, investment property or intangible assets. Deferred income tax Arrangements containing a lease
Financial Statements
IFRS for SMEs Full IFRS Not allowed.
Allowed if the only changes to equity of an entity are a result of profit or loss, payment of dividends, correction of prior period errors or change in accounting policy
Borrowing costs
Recognized in FULL in profit or loss or in other comprehensive income (without recycling) in the period in which they occur.
Categories Basic and complex FVTPL financial Held to maturity instruments investments Loans and receivables Available-for-sale financial assets
Basic: Cash, Trade Not applicable accounts and Notes receivable/payable , Loans from banks/3rd parties, Commercial Paper, Bonds
COMPLEX: Asset-backed securities and repurchase agreements. Options, rights, warrants, futures, forward contracts and interest rate swaps that can be settled in cash or by exchaging another financial instrument. Hedging instrument. Commitments to make a loan to another entity. Investments in another entitys equity instrument. Investment in covertible debt.
costs unless the instrument is measured at FVTPL). If payment is deferred or is financed by an interest rate that is not a market rate, PV of the future payments
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Subsequent measurement
Basic debt instruments are measured at amortized cost using the effective interest method. Investments in nonconvertible and nonputtable ordinary sahres or preference shares are measured at FVTPL if FV can be measured reliably, otherwise, cost less impairment.
Impairment loss is the difference between the assets carrying amount and the best estimate of the amount that the entity would receive for the asset if it were to be sold.
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Non-Financial Assets
IFRS for SMEs Full IFRS Borrowing costs are included in the cost of inventories under limited circumstances as identified in IAS 23.
Non-Financial Assets
IFRS for SMEs Full IFRS Borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset are to be capitalized.
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Non-Financial Assets
IFRS for SMEs Full IFRS Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are required to be capitalized as part of the cost of that asset
Non-Financial Assets
IFRS for SMEs Full IFRS Cost model or revaluation model.
PPE Cost less subsequent accumulated measurement depreciation and any impairment losses (cost model).
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Non-Financial Assets
IFRS for SMEs Full IFRS Significant parts may have different useful lives. Depreciation is calculated based on each individual parts life.
Cost of an item of PPE is allocated to its significant parts, with each part depreciated separately only when the parts have significantly different patterns of benefit or consumption.
Non-Financial Assets
IFRS for SMEs Full IFRS
Review , depreciation method, residual value and useful life at least at each annual reporting date and amended if expectations differ from previous estimates.
Review depreciation method, residual value and useful life if there is an indication of change since the last reporting date and amended if expectations differ from previous estimates.
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Non-Financial Assets
IFRS for SMEs Full IFRS
Research costs are expensed as incurred. Development costs are capitalized when specific criteria are met.
Non-Financial Assets
IFRS for SMEs Full IFRS
Cost model or Revaluation Model.
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Non-Financial Assets
IFRS for SMEs Full IFRS Either FINITE or INFINITE
Non-Financial Assets
IFRS for SMEs Full IFRS
Amortize those with finite useful life. Review amortization method and residual value at least each annual reporting period.
Amortized on a systematic basis over the useful life. Useful life is presumed to be 10 years if a reliable estimate cannot be made. Review basis of amortization for any indication of change.
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Non-Financial Assets
IFRS for SMEs Full IFRS
Not amortized. Useful life is reviewed at each annual reporting period to determine whether events and circumstances continue to support an indefinite useful life assessment.
Not applicable. All intangible assets are considered to have finite lives.
Non-Financial Assets
IFRS for SMEs Full IFRS
The following are tested for impairment irrespective of whether there is indication of impairment: 1) Intangible asset with an indefinite useful life or an intangible asset not yet available for use. 2) Goodwill.
Assets (including goodwill) are tested for impairment when there is an indication that the asset may be impaired. The existence of impairment indicaotrs is assessed at each reporting date.
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Contribution payable for a period to the fund is recognized as a liability for a DC plan after deducting any amount already paid.
Net total of: PV of the DB obligation at the end of the reporting period Less that FV at the reporting date of plan assets (if any) out of which the obligations are to be settled directly.
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Projected unit credit method is required if the information that is needed to make such a calculation is already available, or can be obtained without undue cost or effort. If not, an alternative method is permitted in which future salary progression, future service, and possible mortality during an employees period of service are not considered.
No distinction between expected and actual report on plan assets. All changes in the fair value of plan assets are recorded in profit or loss.
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Valuation allowance is recognized so that the net carrying amount of the deferred tax asset equals the highest amount that is more likely than not to be recovered.
Agriculture
IFRS for SMEs Full IFRS
Exemption from measurement at FV is only allowed if the FV cannot be measured reliably.
Measure biological assets at FV less cost to sell where such FV is readily determinable without undue cost or effort. Where FV is not used, the entity may use cost less any accumulated depreciation and any accumulated impairment loss.
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Agriculture
IFRS for SMEs Full IFRS
Exemption from measurement at FV is only allowed if the FV cannot be measured reliably.
The agricultural produce harvested from biological assets is measured at fair value less estimated cost to sell at the point of harvest. Gains or losses on initial recognition and from change in FV are recognized in profit or loss.
End of presentation.
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