Chapter 5 - IFRS - Financial statements Executive summary...

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Financial statements
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Financial statements Page 2 Executive summary In both frameworks, the components of a complete set of financial statements are the same except that IFRS (and the SEC) requires the statement of changes in equity while US GAAP permits it. In both frameworks, the financial statement presentation is very similar. Differences between the two tend to arise in the level of specific guidance. Significant differences are as follows: Balance sheet (statement of financial position): IFRS includes a minimum list of items to be presented unlike US GAAP. However, SEC regulations have more detailed requirements than IFRS.
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Financial statements Page 3 Executive summary Financial statement presentation differences (continued): Statement of changes in equity: IFRS does not permit the components of comprehensive income to be presented in the statement of changes in equity in lieu of the statement of comprehensive income as permitted by US GAAP. Statement of cash flows: IFRS permits a choice of alternatives for the classification of interest and dividends while US GAAP does not. Notes to the financial statements: Using IFRS, most companies will experience additional financial disclosure requirements compared to US GAAP.
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Financial statements Page 4 Primary pronouncements Balance sheet US GAAP ARB No. 43 – Restatement and Revision of Accounting Research Bulletins (Chapter 2- Form of Statements , Chapter 3A- Current Assets and Current Liabilities ) APB No. 6 – Status of Accounting Research Bulletins APB No.12 – Omnibus Opinion-classification and disclosure of allowances, and other topics APB No. 22 – Disclosure of Accounting Policies SFAS No. 5 – Contingencies, Changes and Error Corrections IFRS IAS 1 – Presentation of Financial Statements IAS 5 – Accounting Policies, Changes in Accounting Estimates and Errors IFRS 5 – Non-Current Assets Held for Sale and Discontinued Operations
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Financial statements Page 5 Primary pronouncements Cash flow statement US GAAP SFAS No. 95 – Statement of Cash Flows SFAS No. 104 – Statement of Cash Flows- Net Reporting of Certain Cash Receipts and Cash Payments and Classification of Cash Flows from Hedging Transactions IFRS IAS 7 – Cash Flow Statements IAS 28 – Investments in Associates IFRS 8 – Operating Segments
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Financial statements Page 6 IFRS requires comparative information for all amounts reported in the financial statements. US GAAP allows a single- year presentation in certain circumstances. SEC rules require a two- year balance sheet presentation and three-year presentation for all other financial statements. Financial statement presentation Comparative financial information
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Financial statements Page 7 IFRS requires a classified balance sheet, except when liquidity presentation provides more reliable and relevant information.
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